Sequoia Capital China targets $9bn fundraising haul regardless of Beijing’s tech crackdown

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Sequoia Capital China is near elevating almost $9bn to place into Chinese language start-ups, defying international investor apprehension about Beijing’s zero-Covid insurance policies, a crackdown on expertise teams and heightened geopolitical danger.

The fundraising haul, which two individuals conversant in the matter put at between $8bn to $9bn for 4 separate funds, will enable China’s premier enterprise capital group to plough new cash into start-ups determined for money.

World traders have largely pulled again from China funds previously yr over regulatory considerations, after an prolonged regulatory crackdown by Beijing torched the valuations of listed tech teams and halted many preliminary public choices in Hong Kong and New York.

Sequoia China plans to shut the spherical this week, one of many individuals mentioned, including it was 50 per cent oversubscribed.

One Beijing-based investor mentioned that whereas many sovereign wealth funds, American college endowments and pension funds had paused China investments this yr, the biggest and broadest funding funds corresponding to Sequoia China and Hillhouse had been nonetheless elevating cash.

“Solely Sequoia and Hillhouse can increase cash from worldwide traders proper now, they see it as decrease danger, like making an index fund funding,” the individual mentioned.

On the prime quality, the funds introduced in by Sequoia China would quantity to almost 170 per cent of the overall raised within the first half of this yr by all China-focused personal fairness and enterprise capital teams, in line with information from business info supplier Preqin.

There may be heightened danger in China. Placing cash into enterprise funds corresponding to Sequoia China requires traders to lock up their capital for 5 to 10 years or longer in an more and more unsure geopolitical surroundings.

Russia’s invasion of Ukraine has stoked considerations that investments in Chinese language start-ups could possibly be hit by the fallout from shut ties between Moscow and Beijing.

Consequently, China-focused funds have struggled to persuade international traders to purchase on this yr, elevating simply $4.8bn within the first six months of 2022, in line with preliminary figures from Preqin. That complete was down about 94 per cent from the identical interval a yr in the past and marked the bottom half-year haul since 2009 through the international monetary disaster.

Led by former entrepreneur and banker Neil Shen, Sequoia China is an affiliate of Silicon Valley-based Sequoia Capital, and has backed most of the nation’s largest tech corporations, together with TikTok proprietor ByteDance, ecommerce juggernaut Pinduoduo and supply group Meituan.

The 4 new Sequoia funds will put money into Chinese language start-ups at completely different levels of their life cycle. Information of the fundraising was first reported by The Info.

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