The Split of Sequoia Capital: Geopolitics, Investment Conflicts, and Future Rivalry
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The Split of Sequoia Capital: Geopolitics, Investment Conflicts, and Future Rivalry
In a sense, this is a victory because we now have these completely independent companies that can go further.
Navigating Web3 tides with focused insightsBy Alex Konrad
Compiled by TechFlow
Sequoia Capital, one of the world's most renowned venture capital firms, is splitting up. Known for early bets on U.S. tech giants like Airbnb, WhatsApp, and Zoom, as well as international powerhouses such as ByteDance and GoTo through its China and India funds, Sequoia is now dividing into three fully independent entities.
The global leadership of Sequoia confirmed the move in a letter to LPs on Tuesday morning, signed by the leaders of the three new firms—Roelof Botha, Neil Shen (沈南鹏), and Shailendra Singh. The resulting companies—Sequoia Capital representing the U.S. and Europe, HongShan representing China, and Peak XV Partners representing India and Southeast Asia—are expected to complete their separation “no later than” March 2024.
In separate interviews with Forbes, the three investment leaders said the decision to dissolve the global Sequoia brand had been building gradually over months. They cited conflicts between the entrepreneurial portfolios of the respective funds, strategic differences leading to brand confusion, and increasing complexity in maintaining centralized regulatory compliance—while acknowledging, yet attempting to downplay, the colder geopolitical climate.
"Things seem to be moving toward harder rather than easier," Botha said. "This isn't surrender—'white flag, we failed.' In a way, it’s a victory because we now have these fully independent enterprises that can go further."
Founded in 1972 with just $3 million in assets, Sequoia became a cornerstone of Silicon Valley’s tech ecosystem, ballooning into a multi-billion-dollar firm through early investments in Apple, Cisco, Google, and Nvidia. In the mid-2000s, the firm began establishing funds in China and India, managed by local investing partners. (It later shuttered an Israel fund launched in 1999.) While the U.S. arm—which has since expanded to include Europe and Israel—has produced standout successes in recent years like Airbnb, DoorDash, Snowflake, WhatsApp, and Zoom, Sequoia China boasts its own impressive roster, including Alibaba, Meituan, and ByteDance, parent company of TikTok. The India and Southeast Asia fund counts companies like Byju's, GoTo, and Zomato among its winners. Sequoia partners have consistently topped Forbes’ Midas List, the annual ranking of the world’s top venture capitalists. In 2023, 10 investors from the firm made the list, led by Shen (沈南鹏), who claimed the No. 1 spot for the fourth time. For half of the Midas List’s 22-year history, a Sequoia investor has held the top position.
From the start, however, Sequoia viewed its regional funds as relatively autonomous, with decentralized deal processes and portfolio decisions. Partners from one geographic region did not review potential deals in another; instead, the funds shared back-office functions such as compliance, finance, investor relations, infrastructure, and an online portal for partners. Investor bases overlapped across regions, and partners often invested personally in each other’s funds. But the partners say divergence has grown over time, investor relationships have become more localized, and each fund has begun building its own software systems.
Going forward, the new firms will build their own independent infrastructure, and partners will no longer invest in each other’s funds. Any profit-sharing—and shared back-office functions—will cease between the regional funds as of December 31. Sequoia declined to comment on its prior profit arrangements.
Despite decades of dominance in venture capital, recent headlines have cast a less favorable light on the firm’s image. Its U.S. and European arm has faced scrutiny over its investment in Elon Musk’s new Twitter and the failed FTX crypto exchange. Meanwhile, the U.S. fund adopted a different fundraising model in February 2022 through the creation of the Sequoia Capital Fund—a large, evergreen vehicle that allocates capital from a single pool and allows for longer equity holding periods. This shift occurred just before market corrections. According to a report by The Information, it allowed limited partners a one-time exemption to withdraw capital. (A source said this was intended to help those needing liquidity due to market changes.) As of earlier this year, the fund held over $13 billion in assets.
Meanwhile, Sequoia’s business in China continues to grow, even as geopolitical ties—particularly between the U.S. and China—have frayed. As Forbes reported in May, Sequoia China remains a major shareholder in ByteDance, holding around 10% of the company, potentially worth billions. The U.S. fund is also a shareholder in ByteDance, having invested globally through growth funds established in recent years. Of course, ByteDance is the parent of TikTok, which has faced repeated controversy and regulatory scrutiny from U.S. lawmakers. In 2020, Doug Leone, then the global leader of Sequoia, lobbied the Trump administration on behalf of ByteDance through the U.S. and Europe fund; last year, the fund reportedly hired a Washington, D.C.-based consulting firm for assistance.
Neil Shen (沈南鹏), still a board director at ByteDance, declined to comment specifically on the investment. But overall, he rejected the idea that the fund split would make it easier for Chinese companies to list in Hong Kong or elsewhere. "These are no longer young companies," he said. "I don’t want to overstate our ability to assist a company with an IPO just because we hold substantial ownership."
In their separate interviews, Botha, Shen (沈南鹏), and Singh all denied that geopolitical tensions were a direct catalyst for the change. They emphasized that growing conflicts between expanding investment portfolios played a larger role. Well-known companies within each portfolio have previously competed directly—such as Stripe in the U.S. and Airwallex in China, which competes with a company backed by Sequoia India. But with Chinese and Indian startups increasingly seeking global expansion earlier and remote work blurring geographic boundaries, such overlaps are becoming more likely. Botha recounted a recent complaint from a U.S.-based Sequoia portfolio company that an Indian competitor supported by a Sequoia team told potential customers it was the firm’s big bet in that category.
"That’s awkward, right?" Botha said. "From the customer’s perspective, you’re trying to buy technology from what you think is the company designated by Sequoia—the one with Sequoia’s backing—but now there are two, and that’s confusing."
Singh noted frustration could run both ways: he described a prominent (but unnamed) U.S. tech company complaining to its U.S. Sequoia partner that it believed a Sequoia India investment would become competitive in the future. But Singh said his team had written the check more than a year earlier—and that Sequoia India had already exited. With the current AI startup boom, Singh anticipates similar conflicts. (Sequoia has invested in OpenAI through its U.S. fund.) "If we’re shut out of investing in important companies in our region due to conflicts involving AI founders, the outcome would be highly disruptive," Singh said.
The funds are diverging in other ways too. Although for over a decade, limited partners from all three regions gathered in one room to review new funds, Sequoia India & Southeast Asia and Sequoia China independently raised their latest funds—$2.85 billion and $9 billion, respectively. (Shen (沈南鹏) said while some of that money came from U.S. institutions, it was primarily “foreign capital,” not from China itself.) While the U.S. business announced a $195 million seed fund in January focused on doubling down on early-stage investments, the China business has recently emphasized non-tech investments, including infrastructure, as well as its hedge fund and public equities practice.
In the U.S. and Europe, the firm named after California’s iconic redwood trees—originally suggested by the late Don Valentine, who wanted a name that would outlive him—will retain the Sequoia name. Sequoia Heritage (a philanthropic family office) and Sequoia Capital Global Equities (a public-private crossover firm) will also continue as separate businesses. Peak XV Partners, the new name for Sequoia India (pronounced “fifteen”), comes from Mount Everest’s original name, Singh said. According to Shen (沈南鹏), Sequoia China has long used the Chinese name 红杉, meaning redwood tree, and will now adopt the English transliteration “HongShan.” "Many Chinese entrepreneurs might not even know how to spell 'Sequoia,'" he said.
Shen (沈南鹏) doesn’t expect a major shift in his investor base due to the HongShan rebranding. "If investors aren’t comfortable with China, they wouldn’t have invested here in the first place. I don’t think choosing a new name will make any difference. Most investors care about returns and performance," he said.
Singh’s fund is already registered in Mauritius, which limits funds to fewer than 100 limited partners each, and Peak XV’s LP base already only partially overlaps with the other Sequoia regions. He added that this will continue. "We love Sequoia, but our brand is built on relationships. We believe our own brand is strong, and this will carry us forward in a positive way," Singh said.
As for the post-split Sequoia, Botha dismissed any notion that the firm wouldn’t continue moving forward from a position of strength—at least by its own historical standards. He remains confident in his PayPal alumni network and fellow South African Musk, saying, “Let’s see what happens on Twitter,” and calling FTX “unfortunate” but a minor loss for a fund with “multiple other winners.” He expressed no regret over the fund model shift, even if it means continuing to hold shares in some publicly listed companies whose stock prices have since declined. "Could we have distributed everything? If you look at the performance of our funds and the companies we’ve backed, it’s hard to argue we’re in a weak position," he contended.
Looking ahead, Botha said he hopes the two firms will view each other as cousins with a shared heritage, even without any formal connection. "It’s a huge success because we, as entrepreneurs ourselves, helped spawn four other outstanding businesses, each now their own leader," he said, referring to the other entities beyond his own. As for Sequoia Capital: "I haven’t been this excited about tech investing in the U.S. and Europe in a decade," Botha said. "It reminds me of the early days of the internet."
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