Sequoia Capital is going to divide itself into three independent companies.
No later than March 31, 2024, Sequoia China will become HongShan, Sequoia India/Southeast Asia will become Peak XV Partners and the U.S./Europe business will remain Sequoia Capital, the venture capital (VC) firm said in a letter to its limited partners (LPs) that it shared in a Tuesday (June 6) tweet.
“Each business will continue to serve the founders and ecosystems where they operate with the flexibility that comes with an independent brand,” the company said in the letter.
The company is being divided because it has become increasingly difficult to run a decentralized global investment business as each of its teams has begun meeting different opportunities in their local markets, Sequoia Capital said in the letter.
“This has made using centralized back-office functions more of a hindrance than an advantage,” the company said in the letter. “Additionally, as each entity’s portfolio has expanded to include companies that are becoming global leaders, we’ve seen growing market confusion due to the shared Sequoia brand as well as portfolio conflicts across entities.”
While the back-office functions are centralized, each entity has had independent ownership and investment decision-making capabilities for over 15 years, according to the letter.
Sequoia Capital launched this decentralized model at the time to enable a local-first approach in each region with teams that have first-hand knowledge of their markets, the letter said.
“Each entity is now a market leader,” Sequoia Capital said in the letter. “To deliver on our mission, we have decided to fully embrace our local-first approach.”
Sequoia Capital is one of the oldest and most successful VC firms and is known for backing tech industry titans, including Apple and Google.
It was reported in April 2022, when Sequoia partner Roelof Botha was named leader of the firm in the third “passing of the torch” since the firm’s founding in 1972, that there has been a “delicate balance” in the organization between the U.S. and European operations on the one hand and the Chinese and Indian arms on the other.
Sequoia’s global sharing of profits and power has been “a constant source of speculation” for those watching the company, the Financial Times reported at the time.