Sequoia Capital is splitting its investment business into three parts, including a stand-alone China unit, amid the complexities associated with running "a decentralized global investment business."
The venture capital firm said in a news release posted Tuesday on Twitter that it will "fully embrace our local-first approach," and will move to "completely independent partnerships" in China, India, and the U.S. and Europe by March 31, 2024. Each will have a distinct brand.
The Sequoia China business will retain its Chinese name and will become HongShan in English, the release said. Sequoia India and Southeast Asia will become Peak XV Partners, while the U.S. and Europe venture capital business will continue to be known as Sequoia Capital.
The firm's Sequoia Heritage and Sequoia Capital Global Equities businesses will also operate under the Sequoia banner, the release said.
"It has become increasingly complex to run a decentralized global investment business," the release said. Due to each business working to meet the opportunities of their own markets and across a range of sectors, using a centralized back-office function is "more of a hindrance than an advantage. Additionally, as each entity's portfolio has expanded to include companies that are becoming global leaders, we've seen growing market confusion due to the shared Sequoia brand as well as portfolio conflicts across entities," the release said.
The firm has investments across the health-care, technology and traditional consumer sectors.
The firm will host a call with limited partners in the coming days, the release said.
Sequoia China manages about $56 billion asset under management. Neil Shen — co-author of the release — has run Sequoia's China presence since 2005. While many rival firms have committees outside China that approve or nix investments there, Sequoia China has been one of the few with its partners making their own on-the-ground decisions.
Mr. Shen has adeptly managed relationships with startup founders, Chinese officials and a global investor base.
Sequoia China invested in about 1,200 portfolio companies in the country and has more than 300 staff in the country. The fund raised about $9 billion for investments in 2022 from pensions, endowment funds and family offices from the U.S., Europe, the Middle East and Southeast Asia.
The prospects for investments in China are now mired in uncertainty. Regulatory actions on both sides of the Pacific are squeezing the nation's technology industry and create unpredictability for its financial backers.
China is still weathering a decline in venture capital investments, despite once being touted as a rival to Silicon Valley.
President Joe Biden plans to sign an executive order that will limit investment in key parts of China's economy by American businesses, people familiar have said. The U.S. has also been briefing its Group of Seven partners on the investment curbs, commonly referred to as reverse CFIUS.
In a speech on May 20, National Security Advisor Jake Sullivan confirmed that it "was no secret" that the U.S. has been working on developing the legal authorities for a targeted set of outbound investment controls.
The policies in work are complementary to ones that review transactions involving investment in the U.S., to determine if they are of national security concern.
--Bloomberg contributed to this story
