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Despite the government regulatory crackdowns, Sequoia China says the funding will support tech companies across all stages in the country.
The Chinese affiliate of American venture capital firm Sequoia Capital has raised $9 billion in fresh funding to back the tech sector in China. This development comes amid cooling investor enthusiasm in the East Asian country. As it stands, global investors remain unsure about the zero-Covid policies in Beijing, and the ongoing regulatory crackdown in the tech space.
Sequoia China, led by investment guru Neil Shen, secured funding from several investors, including pensions, endowment funds, and family offices. These investors also span several continents, regions, and countries, including the US, the Middle East, Europe, and Southeast Asia. According to inside reports, Sequoia China’s investor pool chooses to remain anonymous due to the initiative’s private nature.
Funding to Back Four Separate Developmental Funds
With the fresh capital, Sequoia Capital looks to prop up tech companies across all stages of technology and healthcare-related projects. Capital allocation will go towards four separate funds targeting businesses across all stages. The businesses include Sequoia Capital China Expansion Fund I, Sequoia Capital China Seed Fund III, Sequoia Capital China Venture Fund IX, and Sequoia Capital China Growth Fund VII. Sequoia considers it necessary to fund all stages to further saturate and enhance the deep tech and consumer tech spaces.
Sequoia initially received over $12 billion in a 50% oversubscribed round for its fundraising exercise. However, according to an inside source, the venture capital outlet decided to proceed with the higher end of its original target.
Sequoia China’s decision to raise funds at a time when several investors have paused investments is a daring one. Speaking on this, an investor based in Beijing commented:
“Only Sequoia and Hillhouse can raise money from international investors right now, they see it as lower risk, like making an index fund investment.”
Sequoia China in It for Long Haul
Despite concerns stemming from an economic slowdown and increased regulation, Sequoia China is playing the waiting game. The Chinese affiliate remains optimistic that investing in cutting-edge technology in the country will pay off long-term. This is because such a gesture will help facilitate and advance key industries such as pharmaceuticals as well as healthcare.
The Financial Times, quoting data from industry information provider Preqin, provides telling insight into the prospect of Sequoia China’s funds. According to this information, the funds will be 170% more than those raised by China-focused venture capital platforms in H1. The report also states that this metric applies to all private equity groups focusing on the Chinese economy. Nonetheless, the heightened risk in China may require investors to lock up their capital for a protracted period. For instance, putting money into Sequoia China may require a waiting period of up to 10 years as geopolitical situations unravel.
In other news, Sequoia Capital India recently led an investment round that saw $2 million raised for Web3 payments startup Nume Crypto. According to Nume, the fresh capital will go towards several product-oriented goals and objectives.