Washington, DC CNN –
Venture capital titan Sequoia is splitting its business into three independent partnerships, each with a different brand.
The Silicon Valley-based company’s massive investment in China, which has attracted the attention of US lawmakers amid rising geopolitical tensions with Beijing, will become its own entity.
Sequoia Capital officials on Tuesday briefed investors about the plans, which are expected to be completed by March 2024. The company’s operations in Europe and the United States will retain the current name, Sequoia Capital. Its Chinese unit, Sequoia China, will use its current Chinese name, Hongshan. The company’s business operations in India and Southeast Asia will be spun off into a partnership called Peak XV Partners.
The firm is known for early investments in globally successful American companies such as Google, Apple, Airbnb and a long list of others. The company came under criticism earlier this year for promoting failed cryptocurrency exchange FTX in 2021, but the company remains a force to be reckoned with in the venture capital world.
Sequoia executives said the move would allow its operations to be more efficient by allowing each unit to handle its own administrative functions such as IT, finance and accounting.
“Running a decentralized global investment business has become increasingly complex,” company executives Roelof Botha, Neal Shen and Shailendra Singh said in a news release. “This has made the use of centralized back-office functions more of a hindrance than a benefit.”
Sequoia has invested liberally in Chinese startups at various stages of development, including food-delivery company Meituan, e-commerce marketplace Pinduoduo and ByteDance, the Chinese parent company of TikTok.
The move follows growing scrutiny from US lawmakers about Beijing’s influence on Chinese companies doing business in the United States. In April a group of congressional Republicans called on the Biden administration to “use all available tools” to sanction cloud computing firms linked to China. TikTok filed a lawsuit against Montana over a bill in the state legislature that would ban the app in the state as early as next year.
China is also losing its attractiveness to investors due to economic uncertainty in the country, rising geopolitical tensions and Beijing’s crackdown on international consulting firms. Recent data point to a weaker-than-expected recovery in the world’s second-largest economy after government officials abandoned their costly zero-Covid policy.
The Wall Street Journal first reported earlier this year that Sequoia was reportedly consulting with US national security experts to investigate its potential investments in Chinese companies.