The House Select Committee on China is looking for information about Sequoia’s recent announcement of splitting into three firms, as well as its investments in semiconductor, quantum computing, and artificial intelligence startups in the Asian nation. Sequoia China was renamed as HongShan following the separation.
The legislators requested information from Sequoia and Sequoia Capital China about every firm they had supported that was headquartered in the nation or had substantial operations there and used specific technology. The letter also asked for details on the names of Chinese government investors, the investment criteria, monetary amounts, and business expertise given to the enterprises.
A representative for US-based Sequoia Capital stated in a statement, “We’ve received the letter, are reviewing it, and will respond.” Every organisation that has used the Sequoia name since its founding has been privately held, operated its own investment teams, handled its own money, and made choices about investments on its own. As previously declared in June, by March 31, 2024, we will transition to entirely autonomous partnerships and separate businesses with unique branding.
Sequoia, which declared its official separation from Sequoia China prior to an executive order imposing some limitations on US businesses’ ability to invest in China, is suffering from the committee’s decision. According to analysts, taking action in advance of the directive might diffuse the possibility of more severe consequences, such being ordered to remove all current assets in China. That’s despite the fact that the directive itself wasn’t as stringent as some had thought.
H.K. Park, a managing director at Crumpton Global, which has been advising clients on compliance, stated that “the letter is a warning to all investors that the Select Committee is carefully scrutinising past investments in addition to establishing a process to prevent certain future investments, in contrast to the Executive Order.”
The letter denounced investments in Eversec Technology Co., 4Paradigm, DJI, DeepGlint, and ByteDance, citing them as “problematic publicly known partnerships” with Sequoia Capital China. Additionally, the legislators asserted that since 2020, the company has invested in up to 40 Chinese semiconductor startups.
The House Select Committee on China has opened an inquiry into GGV Capital, GSR Ventures, Walden International, and Qualcomm Ventures in addition to Sequoia. Additionally, the committee is drafting a report on US-China relations that will primarily highlight US corporate activities in the nation.
The Biden administration increased its efforts on Tuesday to prevent sophisticated semiconductors from entering China. As part of this strategy, processors made especially for the Chinese market cannot be sold in China.