Venture Capital firm Sequoia on Tuesday announced it is going to split into three independent entities–Peak XV Partners, which will focus on India & Southeast Asia, HongShan to focus on China, and Sequoia Capital representing the US and Europe.
Peak XV Partners, earlier Sequoia India & Southeast Asia, will be managed by its present leadership team and will continue to invest from the most recently raised set of funds focused on India & Southeast Asia, it said.
The separation is expected to complete by March 2024 and any profit sharing between the regional funds will cease by December 31.
The move has been necessitated by increasing complexities and portfolio conflicts. “Over the years, the strategies for each business have diverged and our scale and market leadership across different geographies has started to result in brand confusion and portfolio conflict,” Sequoia Capital’s MD Shailendra Singh wrote in a blog post on Tuesday.
“Things seemed to be going in a direction where it gets harder, not easier,” Roelof Botha, partner, Sequoia Capital told Forbes magazine in an interview on Tuesday. “This isn’t a retreat saying, ‘white flag, we failed’. It’s more of a victory in the sense that we have these fully independent businesses that can go even further,” said in the interview.
At least five portfolio companies of Sequoia India & Southeast Asia–BharatPe, Trell, Zilingo, GoMechanic, and Zetwerk–were caught in the crosshairs of governance issues lately. Recently, GoMechanic admitted to making “grave errors in financial reporting”.
Sequoia India & SEA has raised $9.2 billion across 13 funds, and invested in over 400 startups in the region. The firm has seen over 50 companies cross $1 billion in value already, and had $4.5 billion of realised exits so far.
Peak XV has $2.5 billion of uninvested capital and will continue to focus on all of our existing sectors, including SaaS, AI, developer tools, cyber security, cloud infrastructure, fintech, climate tech, health tech and consumer.
While Sequoia India & Southeast Asia has been rebranded to Peak XV Partners, Sequoia China will retain its original name in Chinese but will adopt the name HongShan in English, the statement said.
The firm, known for its early-stage investments in global tech giants such as Google and Instagram, as well as some of the biggest Chinese internet companies, has been run by Neil Shen since its establishment in 2005.
Sequoia China has backed over 1,000 companies in the country, per its website, with over 130 portfolio companies that have gone public and over 100 privately-held companies that have achieved unicorn status. It has offices in Beijing, Shanghai, Hong Kong, and Shenzhen.
“It has become increasingly complex to run a decentralised global investment business. As each entity’s portfolio has expanded to include companies that are becoming global leaders, we’ve seen growing market confusion due to shares Sequoia brand as well as portfolio conflicts across entities,” said Botha, Shen and Singh in a joint statement.
