A US congressional committee is targeting Sequoia Capital after starting investigations into several other venture capital firms for their investment in Chinese technology companies.
The US House of Representatives Select Committee on China is seeking information about Sequoia Capital’s investments into artificial intelligence, semiconductor and quantum computing companies in China, as well as its recently announced split into three firms.
In the split, Sequoia China was rebranded as HongShan (紅杉).
Photo: Bloomberg
US lawmakers asked Sequoia Capital and Sequoia China to provide information about each company it had backed based in the country, or with significant operations there, that was engaged in certain technologies.
The letter also requested information on dollar amounts, business expertise provided to the companies, investment criteria and the names of Chinese government investors.
“We’ve received the letter, are reviewing it and will respond,” a spokesperson for California-based Sequoia Capital said in a statement. “Since inception, each entity operating under the Sequoia brand has been independently owned, had separate investment teams, managed their own funds and made independent investment decisions. As announced in June, we will move to completely independent partnerships and become distinct firms with separate brands no later than March 31, 2024.”
The committee’s move is a setback for Sequoia Capital, which announced its formal split from Sequoia China before an executive order that placed some restrictions on China investing by US entities.
Analysts said that acting ahead of the order could defuse the potential of harsher actions, such as an order to divest from investments in China.
That is even though the order itself was less strict than some anticipated.
“In contrast to the executive order, the letter is a warning to all investors that the Select Committee is carefully scrutinizing past investments in addition to establishing a process to prevent certain future investments,” said H.K. Park, a managing director at Crumpton Global LLC, which has been advising clients on compliance.
The letter called out investments in start-ups Eversec Technology Co (恒安嘉新), 4Paradigm Technology Co (第四範式), DJI Technology Co (大疆創新), DeepGlint Information Technolgies Co (格靈深瞳) and ByteDance Ltd (字節跳動) — alleging that they are Sequoia China’s “problematic publicly known partnerships.”
The lawmakers also said that Sequoia China made as many as 40 investments in Chinese semiconductor companies since 2020.
Sequoia Capital is not the only venture capital firm being targeted by the committee, which has launched an investigation into GGV Capital, GSR Ventures, Walden International and Qualcomm Ventures.
The committee is also working on a report about US-China policy that would focus in large part on US business activity in the country.
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