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HomeWorldSequoia under investigation by US Congressional committee over Chinese Tech Investments

Sequoia under investigation by US Congressional committee over Chinese Tech Investments

Sequoia Capital, one of many world’s largest enterprise capital companies is underneath the lens of the US Home Choose Committee on China for its investments in Chinese language tech firm, coping with AI, quantum computing and semiconductor know-how. It additionally consists of HongShan, the rebranded arm of Sequoia China

The Home Choose Committee on China has set its sights on Sequoia Capital, because it continues to scrutinize the investments of enterprise capital companies in Chinese language know-how corporations. This improvement follows comparable investigations into a number of different VC companies engaged in China-related investments.

The committee has initiated an inquiry searching for info pertaining to Sequoia’s investments in numerous sectors, together with synthetic intelligence, semiconductor know-how, and quantum computing, inside China. This investigation additionally encompasses Sequoia’s latest restructuring, the place Sequoia China was rebranded as HongShan.

Lawmakers have requested detailed info from each Sequoia and Sequoia Capital China relating to the businesses they’ve supported in China or these with important operations within the nation, particularly these concerned in particular applied sciences. The knowledge sought consists of funding quantities, the extent of enterprise experience supplied to those corporations, funding standards, and the identities of any Chinese language authorities traders concerned.

In response to the committee’s inquiry, a spokesperson from Sequoia Capital acknowledged, “We’ve received the letter, are reviewing it and will respond. 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.”

This improvement poses a setback for Sequoia Capital, because the agency had introduced its separation from Sequoia China earlier than an govt order was issued, which imposed sure restrictions on US entities investing in China. Analysts have advised that this proactive transfer could mitigate the danger of extra extreme actions, resembling a requirement to divest from current investments in China. Notably, the chief order turned out to be much less stringent than some had anticipated.

H.Ok. Park, a managing director at Crumpton International, which advises shoppers on compliance, commented, “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.”

The committee’s letter particularly highlighted Sequoia Capital China’s investments in startups like Eversec Expertise Co., 4Paradigm, DJI, DeepGlint, and ByteDance, labeling them as “problematic publicly known partnerships.” Moreover, the lawmakers alleged that the agency had made as many as 40 investments in Chinese language semiconductor corporations since 2020.

Sequoia shouldn’t be the only real VC agency underneath investigation by the Home Choose Committee on China. GGV Capital, GSR Ventures, Walden Worldwide, and Qualcomm Ventures are additionally underneath scrutiny. The committee is concurrently engaged on a report specializing in US-China coverage, with a major emphasis on US enterprise actions inside China.

In associated information, the Biden administration has intensified efforts to limit the export of superior chips to China, together with limiting the sale of processors designed particularly for the Chinese language market.

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