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Original source:36 krypton

36 Krypton exclusively learned that on June 6, Sequoia issued an open letter announcing that it would completely split up the three funds in the United States, Europe, China, and India/Southeast Asia, and each would become a completely independent operating entity, and use different brands to conduct business. In the future, Sequoia China will continue to use the Chinese brand name of "Sequoia" and adopt the English brand name "HongShan"; Sequoia America and Europe will continue to use "Sequoia Capital", while Sequoia India/Southeast Asia will use the new brand name "Peak XV Partners ".

In the open letter, Sequoia stated that "this change will enable each region to better create more value for the founders and LPs they serve", and the reason for this decision is because "how to manage and operate decentralized ’s global investment business is becoming increasingly complex and challenging.”

Sequoia wrote in the letter: Establishing a local investment team, focusing on serving local entrepreneurs, and giving priority to meeting localization needs are the core elements of Sequoia’s success in different regions of the world. Today, Sequoia's business entities and teams in various regions have become leaders in the local market. In order to continue to succeed in various regions in the future, it is necessary to further embrace the local priority strategy.

Around 2005, Sequoia Capital, which originated in Silicon Valley, decided to start internationalization and enter more emerging markets. Sequoia China and Sequoia India/Southeast Asia were successively established. For a long time, Sequoia has been adopting a unique decentralized operation model—international brand, no headquarters, localized operation as its biggest feature, and each regional team has investment decision-making power in most matters.

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the student surpasses the master

In 2004, when a reporter from "Forbes" asked Don Valentine, the founder of Sequoia Capital, whether he would invest in China, he replied firmly: China is too far away, and I still hope that entrepreneurs will be closer to us.

Soon, Valentine's remarks proved to be just smoke bombs. A year later, Mike Moritz and Doug Leone, then managing partners of Sequoia Capital, met with Ctrip co-founder Shen Nanpeng and reached a cooperation, and Sequoia China came into being.

From the 40 miles tightly surrounding Silicon Valley to the Pacific Ocean spanning 14,000 kilometers, Sequoia stated in the open letter that this is because 18 years ago, entrepreneurs who created a new generation of industry leaders emerged from all over the world.

The brilliant performance of Sequoia China proves the success of this road to localization. More than 1,200 invested companies, more than 130 listed companies, and more than 100 unicorns have captured new economic giants such as Meituan, Pinduoduo, and ByteDance in the early stages. This is what Sequoia China has handed over in 18 years. answer sheet.

As a successful entrepreneur, Shen Nanpeng has also become one of the most high-profile top investors in the world during his leadership of Sequoia China for more than ten years. He has been included in the "Forbes" list of the world's best venture capitalists 12 times, 4 times, and 3 times in a row.

In a sense, Sequoia China has come from behind, surpassing its "cousin" on the other side of the ocean in many ways.

According to public information, the scale of funds managed by Sequoia China has exceeded RMB 300 billion. It is the only institution among the three major markets of Sequoia that has established full-chain, full-stage and full-cycle investment capabilities. Moreover, Sequoia China's investment direction is more extensive and diverse. In addition to the technology industry, it also includes two other areas that are less involved in the field of medical care and traditional consumption. In addition, Sequoia China has also established a new infrastructure fund to invest in China. The infrastructure of the new economic industry, and in recent years began to develop mergers and acquisitions investment - these are Sequoia China's unique businesses.

A detailed count of Sequoia’s investment cases in recent years shows that the pure geographical division is no longer the investment boundary of the three funds. For example, Sequoia China has invested in some overseas-headquartered biotechnology and medical and health companies, as well as European fashion consumer brands, as well as start-ups in Japan, South Korea, and Australia. The investment targets have already expanded from local Chinese entrepreneurs to global outstanding Chinese entrepreneurs.

As Sequoia becomes the leader in the venture capital market in each region, the leading companies invested by them are bound to compete with each other in going to the international market. For example, in the field of design software, Blue Lake invested by Sequoia China and Figma invested by Sequoia America, in the field of financial technology, there are also Airwallex invested by Sequoia China and Sunrate invested by Sequoia India, and so on. For a unified "Sequoia" brand, this brings negative value.

In addition, Sequoia America has embarked on a journey of "mercury retrograde" visible to the naked eye in the past two years. First, after Roelof Botha took over the top management of Sequoia, he launched the evergreen "Sequoia Fund" at the peak of the bull market in October 2021. However, as the US stock market suffered heavy losses, the performance of this pioneering VC fund was not satisfactory; Furthermore, Sequoia America’s heavily held cryptocurrency and derivatives exchange FTX collapsed, and its decision to invest in Twitter was also controversial, and may face floating losses, which made Sequoia America’s asset value shrink significantly; in March this year, Silicon Valley The bank collapsed suddenly within 48 hours of the run, and Sequoia America, as a major customer, experienced a special test of life and death. The combination of these factors has caused this old VC with a "fire in the backyard" to encounter some crises of confidence, and it has also forced it to focus on the US domestic market.

The increasing differences in investment strategies, industry directions, and member company structures have led to significant differentiation in investment strategies across Sequoia. In this case, the original architecture has become unsustainable. Sequoia may have been keenly aware that only by adapting to local conditions and being flexible and independent can it further maintain its vitality and advantages in various markets, which is more important than maintaining a "big umbrella" global unified brand. "Make each of them better after the split" may be Sequoia's ultimate thinking in making this decision.

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The End of Internationalization is Localization

On the dune road of Silicon Valley, where venture capitalists gather, Sequoia is not the only legendary institution. But if you look at the world, Sequoia has developed a unique style in the internationalization of investment institutions, which is unmatched so far.

Sequoia's internationalization path is different from that of many Silicon Valley funds in the same period. It abandoned the traditional idea of ​​managing global business with the United States as its headquarters, but devoted itself to building local teams in different regions that are well versed in the local market and ecology. In the early stage of development, Sequoia shared best practice experience with regional teams and helped lay a solid foundation; each region has independent ownership and investment decision-making power, but some back-office functions and brands are managed globally.

Judging from recent years, as Sequoia’s main players in each market continue to grow, and even become the industry leader, some background functions, such as finance, legal affairs, IT, etc., can no longer be solved well if they continue to maintain global unified management. Local demand affects their respective operating efficiencies.

As early as more than a year ago, before the former leader of Sequoia Capital, Doug Leone, was about to announce his retirement, it was rumored that Sequoia's regions would "part ways". From today's point of view, parting ways is not groundless, but the three parties are waiting for the time when things will come to fruition.

In July last year, Sequoia China disclosed the completion of four new funds raising a total of $9 billion. This fundraising against the trend is not only an increase in support for Sequoia China from international investors, but also a shot in the arm for China's technological innovation and entrepreneurial ecology, and it was completed completely independently by the Sequoia China team.

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HongShan's New Journey

In the official announcement released by Sequoia, Sequoia China will use the new brand name of "Hongshan". Today's Sequoia China has become a real "Chinese Sequoia".

The meaning behind this is self-evident: Sequoia China can continue to use its own and the international appeal of the invested companies, adopt more flexible strategies, serve more entrepreneurs and LPs, and face a broader market, so as to create greater value. Especially in the future, as Sequoia China's tentacles can extend further, this will be good news for high-potential Chinese entrepreneurs all over the world, whether they return to China to start businesses or go global.

Today, Sequoia China has taken a milestone step, and a new "HongShan" with global potential ushered in the Day 1 moment. How will it start its own development path, and how will it write new history on a larger stage? We might as well wait and see.