Considered one of Silicon Valley’s most distinguished funding corporations will face authorities scrutiny over its investments in China. Sequoia Capital has obtained a well mannered however pointed request from Congress to enter into extra element on the way it will stop additional U.S. funding {dollars} from advancing Chinese language pursuits.
Sequoia introduced in June that it will be splitting into three items: Sequoia Capital within the U.S. and Europe, Peak XV Companions in India and Southeast Asia, and HongShan in China (previously Sequoia Capital China). Whereas the corporate claimed to be doing so resulting from it being “more and more complicated to run a decentralized international funding enterprise,” it appeared clear to all that it was in anticipation of a authorized requirement to divest from sure strains of enterprise within the rival superpower.
The Choose Committee on the Chinese language Communist Celebration, led by Mike Gallagher (R-WI), would really like additional assurance that Sequoia is in actual fact splitting up, and whether or not that’s ample to forestall — as is now required following a current Government Order — U.S. {dollars} from ending up funding Chinese language efforts in quantum computing, semiconductors, AI, and different vital tech sectors.
The letter, which might be learn right here, despatched to Sequoia calls the cut up “a step in the correct route,” however provides:
Though Sequoia’s cut up seems to resolve among the considerations detailed above by curbing the movement in some circumstances of U.S. managerial and technological experience to problematic PRC firms, vital questions stay…
These questions are, first, whether or not the cut up may probably and paradoxically intensify funding within the proscribed industries by permitting HongShan to behave with out the screening and oversight of its U.S. counterpart. And second, whether or not HongShan would possibly intensify its investments in U.S. startups for related causes.
The letter from the committee asks Sequoia to record all firms it has invested in which can be based mostly or have vital operations in China, together with quite a few particulars like possession, Chinese language authorities curiosity, decision-making processes and so forth.
It additionally asks for extra data on the reported 50 p.c of Sequoia Capital China restricted companions who’re based mostly within the U.S. and the way they’ve invested.
Lastly, it asks how Sequoia would reply if the U.S. put one in all Sequoia’s portfolio firms on a sanctions or commerce restriction record.
It’s potential that among the data requested for could also be confidential, in flux, or just unknown (significantly the final query, which considerations a hypothetical). Nonetheless, the committee directs Sequoia to reply by November 1.