Sequoia Capital announces three-way split to separate China business

Sequoia Capital, a venture capital firm, has declared their intention to divide into three separate partnerships, each dedicated to the United States, China, and Asian markets respectively.

On June 6, Sequoia announced a move to decentralize its back-office functions. According to a post on Twitter, the motivation for this was due to the rising global financial complexity and the increasing brand confusion. Sequoia said it intends to take a “local-first” approach.

The U.S. branch will continue to concentrate on projects located in North America, while another branch will be dedicated to China and a third branch will be responsible for India and other Asian markets.

Sequoia, one of the most significant venture capital companies in terms of assets managed and total capitalization, gained recognition in the 1970s. Its first substantial investment was Atari in 1975, shortly before it became one of the first investors of Apple in 1978.

Throughout the years, Sequoia has demonstrated an uncanny aptitude for investing in tech favorites. Its list of investments includes Google, Cisco, Nvidia, YouTube, Airbnb, WhatsApp, Stripe, and BitClout, all of which were made at an early stage.

The company put $213.5 million into FTX in 2021, a year in which FTX earned $1 billion in revenue. Unfortunately, FTX then went into decline in November 2022, leading to a maximum loss of $9 billion for the week beginning on Nov. 7.

Sequoia Capital has reduced the value of its entire $214 million investment in FTX to zero.

Despite the fall, a report released by the United States Securities and Exchange Commission on February 3rd stated that Sequoia Capital holds a primary fund of $13.6 billion. According to TechCrunch, the company also manages a portfolio for its customers that is worth approximately $85 billion.

The division of the Sequoia arrives amid a period of great turmoil in the relationship between the United States and China. Animosity between the two countries heightened on June 3 when the American military released a video showing a Chinese destroyer dangerously maneuvering around a U.S. warship (in a manner analogous to cutting off another driver on the highway).

Relations between the United States and China have recently been described as frosty after several close calls in 2023 that have put both countries on edge. In May, a U.S. reconnaissance aircraft was forced to take evasive action due to a Chinese fighter jet’s hazardous fly-by, and in February, a Chinese surveillance balloon – claimed by Chinese authorities to be a weather balloon – was seen drifting over U.S. airspace in Montana.

Going ahead, Sequoia’s American and European divisions will still work under the Sequoia name, while its Indian and South East Asian arm will be rebranded to “Peak XV Partners”. The firm’s Chinese branch will keep its Chinese-language name and be referred to as “HongShan” in English.

The company stated that the alterations will be finished at the latest by March 31, 2024.