Major Silicon Valley Investor Succumbs to Market Demand, Spinning Off Lucrative China Business!
GGV Capital, a leading Silicon Valley venture capital firm, joins the growing list of investors opting to split their US and China operations amid escalating tensions over technology and geopolitical issues
GGV Capital, a prominent venture capital firm based in Silicon Valley, has recently decided to split its operations in the United States and China into distinct entities. This move comes amidst growing tensions between the two countries concerning technology and geopolitics.
The firm made an announcement on Thursday, stating its plans to split its business into two distinct firms with new brands. The new brands have not been disclosed yet.
As per the company, one of the firms will focus on North America, Latin America, Europe, Israel, and cross-border US-India deals. The team, led by managing partners Glenn Solomon, Hans Tung, Jeff Richards, and Oren Yunger, will be based in California and New York.
The other side will have a particular focus on China, Southeast Asia, and South Asia. It will be operated from its main office in Singapore, led by managing partners Jenny Lee and Jixun Foo.
GGV's existing funds denominated in Chinese yuan will remain under independent management, operating under the Chinese brand, Jiyuan Capital.
The firm stated that the decision was driven by the significant shift in the investment landscape and the growing complexity of the operating environment over the past decade. It further mentioned that GGV is undergoing changes in response to these emerging realities.
The transition is expected to be completed by the end of the first quarter of next year.
Jenny Lee, the managing partner of GGV Capital, will be co-leading the Asian division of the company as it transitions into an independent firm, said GGV.
GGV Capital manages assets totaling around $9.2 billion and is renowned for its investments in global tech firms like Alibaba (BABA), Airbnb (ABNB), Slack, ByteDance (owner of TikTok), and Didi (a Chinese ride-hailing provider). This decision has been made in response to the ongoing impact of US-China tensions on the operations of businesses in the world's two largest economies.
U.S. and Chinese national flags fly outside a company building in Shanghai, China, on Tuesday, October 22, 2013.
Tomohiro Ohsumi/Bloomberg/Getty Images/File
US investment curbs deal 'major blow' to Chinese startups
The Biden administration's recent announcement to restrict investments by American venture capital and private equity firms, as well as joint ventures, in Chinese artificial intelligence, quantum computing, and semiconductors will further worsen the decline in deals between the United States and China. Analysts and investors have expressed that this executive order will deal a significant blow to Chinese startups.
Asked whether the US order or wider geopolitical tensions had factored into its decision, GGV Capital declined to comment.
The firm has recently come under greater scrutiny from US lawmakers.
In July, a US House committee sent letters to four investment firms, including GGV, expressing serious concern and demanding information regarding their investments in Chinese artificial intelligence, chips, and quantum computing companies. Among these investments was a deal between GGV and Megvii, an AI developer infamous for its facial recognition software. Megvii has faced accusations of human rights violations against Uyghurs and other Muslim minority groups in China's Xinjiang region.
Megvii was added to a US trade blacklist in 2019 over the issue and previously told CNN that there were "no grounds" for that decision.
A signage bearing the logo is displayed prominently at the headquarters of Sequoia Capital, a venture capital investment firm, located on Sand Hill Road in Menlo Park, California's Silicon Valley. This photo was taken on August 25, 2016, and is credited to Smith Collection/Gado/Getty Images.
US venture capital titan Sequoia to split off China business amid tension with Beijing
The ongoing pressure has already led other firms to separate their US and Chinese businesses this year.
Sequoia, a leading global venture capital firm, has recently made a significant strategic move. In June, the firm announced its decision to divide its operations into three distinct entities, focusing on Europe and the United States, China, and India and Southeast Asia. Notably, its China business will be operated autonomously under the name Hongshan. The decision to restructure reflects the growing complexity of managing a decentralized global investment business, according to the firm's leadership based in Silicon Valley.
Dentons, a prominent law firm, announced in August that its China division would undergo a transformation into an independent legal entity. This decision was in direct response to the implementation of new Chinese regulations pertaining to data privacy, cybersecurity, and capital control.
