By Charlie Conchie
Venture capital behemoth Sequoia Capital has revealed plans to carve up its business into three distinct firms due to the “increasingly complex” pressures on its operations across the US, China and India.
In a letter to investors today, Sequoia chiefs said they would split the firm’s US, China and India businesses to “become distinct firms with separate brands” by the end of March next year.
The China division will adopt the name HongShan while the firm’s Indian arm will become Peak XV Partners. The US and European operations will retain the Sequoia Capital name.
The move splits apart the model that has defined the storied Silicon Valley investor’s international operations since the mid 2000s, when it expanded beyond the US and opted to set up shop via investment partners in China and India to tap into the rise in start-ups in the two regions.
In the letter, Sequoia’s three founders Roelof Botha, Neil Shen and Shailendra Singh said the sprawling nature of the business had caused growing conflicts of interest and was holding back its growth.
“It has become increasingly complex to run a decentralized global investment business. For example, each business has evolved to meet the opportunities in their markets across a wide range of sectors[…],” they said.
“This has made using centralized back-office functions more of a hindrance than an advantage,” they added.
“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,” they said.
Sequoia was founded in 1972 in California has since become the most prolific backer of start-ups in Silicon Valley. The firm had some $85bn in assets under management in 2022 but it has been hit by the global slump in venture capital in the past year. The investor was also caught up in the implosion of FTX last year, losing $150m on its investment in the crypto exchange.
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