US funding agency and TikTok funder Sequoia is going through Congressional scrutiny over its investments in China.
Silicon Valley-based funding agency Sequoia Capital is going through authorities scrutiny over its Chinese language investments, together with ByteDance-owned TikTok. Congress has despatched a request to the agency to element the way it will “stop additional US funding {dollars} from advancing Chinese language pursuits,” as per a latest Government Order.
Earlier this 12 months, Sequoia introduced its plans to separate into three entities — Sequoia Capital within the US and Europe, Peak XV Companions in India and Southeast Asia, and HongShan in China, previously Sequoia Capital China. The corporate claimed the restructuring was to handle the “more and more complicated” nature of working a decentralized international funding enterprise, however some authorities entities noticed it as thinly veiled preparations for an anticipated authorized requirement to divest from Chinese language enterprise.
The Choose Committee on the Chinese language Communist Get together, headed by Mike Gallagher (R-WI), would love authorized assurance that Sequoia is splitting up and whether or not that may adequately stop US {dollars} from funding Chinese language pursuits in expertise sectors, together with quantum computing and synthetic intelligence.
“Though Sequoia’s break up seems to resolve a few of the issues detailed above by curbing the move in some instances of US managerial and technological experience to problematic PRC corporations, vital questions stay,” the committee’s letter reads partly, with questions together with whether or not the break up may paradoxically exacerbate funding in tech industries by enabling HongShan to behave with out the oversight of its US counterpart.
The committee’s letter requests that Sequoia checklist all corporations during which it has invested which might be primarily based or have vital operations in China, in addition to quite a few particulars, together with possession and Chinese language authorities curiosity. It additionally asks for extra data on the reported 50% of Sequoia Capital China’s US-based restricted companions and the way they’ve invested.
Additional, the letter asks how Sequoia would reply ought to the US put certainly one of its portfolio corporations on a sanctions or commerce restriction checklist. The committee directs Sequoia to reply by November 1.
Knowledge from TechCrunch stories Sequoia Capital China had already scaled again its capital deployment throughout the nation earlier than the break up, having recorded 62 offers between Q3 2022 and Q2 2023, in comparison with 177 offers throughout the identical interval the earlier 12 months.