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The biggest venture firm is dividing into three units

June 7, 2023: On Tuesday, Sequoia, one of the biggest venture firms in the world, told investors that 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, mentioning an increasingly tough 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 the managing partner for Sequoia’s U.S. and Europe businesses, while Shen and Singh run Sequoia’s China and Southeast Asia businesses, respectively.

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

The partners said the move will be completed by March 31, 2024. A source known with the topic, which spoke anonymously, said that the timing was decided in a “gradual” process and that the distinctive nature of each market molded how individual geographic units approached investments.

The restructuring comes as geopolitical tensions between China and the United States have risen, and American businesses approach Chinese investment with more significant 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 pushed successive, lucrative investments in TikTok parent ByteDance, under scrutiny from U.S. regulators and lawmakers.

Fundraising and investment approaches differed between businesses, the person familiar said, noting that Sequoia China opted to divide its investment strategy between multiple funds. In contrast, Sequoia’s U.S. and European businesses were 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 noticed 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 to investors. “We’ve seen growing market confusion due to the shared Sequoia brand and 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.

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The biggest venture firm is dividing into three units