Sequoia, the renowned global venture capital firm known for its early investments in tech giants like Airbnb, WhatsApp, and Zoom, is undergoing a major transformation. The firm has decided to split into three separate entities, each operating as a fully distinct firm.
In a letter addressed to limited partners, Sequoia’s global leadership, including Roelof Botha, Neil Shen, and Shailendra Singh, confirmed the news of the split. The resulting firms will be known as Sequoia Capital (representing the U.S. and Europe), HongShan (in China), and Peak XV Partners (in India and Southeast Asia). The separation process is expected to be completed no later than March 2024.
According to a Forbes interview, the decision to divide Sequoia’s global brand was the product of protracted conversations that gathered traction in recent months. Conflicts between the startup portfolios of the various funds, brand confusion caused by divergent tactics, and the increasing burden of maintaining centralised regulatory compliance were all mentioned as significant issues. While acknowledging the impact of a more difficult geopolitical environment, the three corporations’ CEOs minimised its significance, emphasising the positive outcome of having totally independent businesses that can prosper even more.
Sequoia Capital, which began with a tiny $3 million fund in 1972, quickly earned a name for itself in Silicon Valley by making early investments in tech titans such as Apple, Cisco, Google, and Nvidia. Over time, the firm expanded its international footprint by launching funds in China and India in collaboration with local investment specialists. While the Israel-based fund was eventually phased down, Sequoia China, Sequoia India, and Sequoia Southeast Asia emerged as major regional players in their own right.
Sequoia’s US operation, which later extended to Europe and Israel, made significant investments in firms such as Airbnb, DoorDash, Snowflake, WhatsApp, and Zoom. Meanwhile, Sequoia China had an impressive portfolio that included Alibaba, Meituan, and ByteDance, TikTok’s parent firm.
The India and Southeast Asia funds have also made profitable investments in firms such as Byju’s, GoTo, and Zomato. With ten investors in 2023, Sequoia has continuously had the most partners recognised on Forbes’ Midas List, an annual ranking of the world’s greatest venture capitalists. Notably, Neil Shen won the title for the fourth time. In fact, a Sequoia investment has topped the Midas List for half of its 22-year history.
Sequoia’s plan to divide into two businesses is an important milestone in the company’s adaptation to the shifting dynamics of the global venture capital ecosystem. The firm intends to optimise its operations, increase its focus on regional expertise, and continue its heritage of encouraging revolutionary discoveries in the computer industry by becoming a unique organisation.