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14 Oct - Commercial Awareness - Tech

Topic: Sequoia’s Split in the APAC region

https://www.ft.com/content/6e3b6905-0b0f-4215-80a4-4082cb899966

https://www.bloomberg.com/press-releases/2023-10-10/co-led-by-legend-capital-leadrive-completes-series-d-financing-lnjx8dki

https://www.ft.com/content/e007ce22-9763-4c9b-969f-ff4e97f320e1

https://www.ft.com/content/a37c6b7c-bec1-457b-8125-a3dbe2a8a275

Background;

• Following Sequoia’s split with its Chinese arm, there are currently three arms in the APAC regions: China, India, and Singapore.
• Sequoia China, aka HongShan, manages $56 billion, they planned to open an office in SG.
• Sequoia India aka Peak XV already has an office in SG. 
• Although operating as different entities, they did not sign non-compete provisions. Though the two entities expressed that they orient towards collaboration > competition.

Singapore:

• It appears that SG is pulling both arms, but HS actually stepped in when PX was debilitating.
• Zilingo went into liquidation following complaints and the high-profile firing of its co-founder and CEO.
• Byju’s value was written down by their investors, their auditors resigned, and a series of high-profile departures.

Hong Shan in China:

• The Chinese VC fund plans to focus on EV and clean energy - a sector dominated by China with their exclusive to raw minerals required to manufacture battery. A recent deal to accentuate its growth is Leadrive’s series D financing, which raised RMB 600mn.
• It is currently managed by Neil Shen, who was famous for his early bet on Alibaba and TikTok’s owner Bytedance.
• Within China’s VC space, a recent news that I noticed is the IPO of Tiantu Capital, $144mn on the HKSE. The IPO was assisted by LA-based law firm O’Melveny.

US vs China

• The split was described by FT to be a result of the tension between Washington and Beijing. US prohibits investment into China, especially in critical sectors (military and technology), and vice versa.
• However, VC funds and PE funds are still taking risks. For example, California and Massachusetts pension funds are among HS’s investors. In fact, about 50% of its investment comes from the US.
• This may not be related to VC but I saw yesterday that Vanguard is investing in China military group indirectly.

In my personal view, I think this signifies great potential in the APAC region as private capital is flowing in. I’m not entirely sure about the start-up scenes in Asia – eg how many promising start-ups there are – but currently, there is a high amount of dry powder in the EU. I wonder if the capital will find the ideal start-ups to invest in.