Sequoia Capital to split into three parts, separating its China and India businesses

Sequoia Capital Partner Roelof Botha (L) and Neil Shen, founding and managing partner of Sequoia China (R)

Getty Images

Sequoia Capital, one of the world’s largest venture firms, told investors Tuesday morning it would divide its global partnership into three separate and independent geographic units, splitting off its Sequoia China venture from the marquee Europe and U.S. partnership, citing an “increasingly complex” dynamic.

Sequoia China and Sequoia’s Southeast Asian arms will become independent businesses by next year.

Sequoia partners Roelof Botha, Neil Shen and Shailendra Singh delivered the update to their limited partners via a joint message. Botha is managing partner for Sequoia’s U.S. and Europe business, while Shen and Singh run Sequoia’s China and Southeast Asia businesses, respectively.

“To deliver on our mission, we have decided to fully embrace our local-first approach,” the three partners told their investors.

The move will be completed no later than March 31, 2024, the partners said. A source familiar with the matter who spoke on condition of anonymity said that the timing was decided in a “gradual” process and that the idiosyncratic nature of each market molded how each geographic unit approached investments.

The restructuring comes as geopolitical tensions between China and the United States have risen and American businesses approach Chinese investment with greater apprehension. Venture investment in the U.S. is also down significantly compared with 2021 or 2022, according to PitchBook data.

Sequoia’s Chinese wing has reportedly made successive, lucrative investments in TikTok parent ByteDance, which has been under mounting scrutiny from U.S. regulators and lawmakers.

Fundraising and investment approaches varied between businesses, the person familiar said, noting that Sequoia China opted to divide its investment strategy between multiple funds while Sequoia’s U.S. and European business restructured to focus on the Sequoia Capital Fund.

The U.S. firm will retain the Sequoia branding. Shen’s Chinese fund, which had been increasingly seen as an independent entity even before the move, will take the name HongShan in English. Singh’s Indian unit will be named Peak XV Partners.

“It has become increasingly complex to run a decentralized investment business,” the executives wrote in their message to investors. “We’ve seen growing market confusion due to the shared Sequoia brand as well as portfolio conflicts across entities.”

Sequoia is one of the world’s top venture funds, with notable investments in Apple, Google (now known as Alphabet), PayPal and Zoom.

Leave a Reply

Your email address will not be published. Required fields are marked *