Sequoia Capital China raises nearly $9bn across four funds: report

Sequoia’s success runs counter to the overall fundraising trend for venture funds based in greater China, which has been on the decline for the past few years.

Sequoia Capital China has raised nearly $9 billion across four new funds, beating its target, according to a report by The Information.

Sequoia’s success runs counter to the overall fundraising trend for venture funds based in greater China (defined as China, Hong Kong, Macau and Taiwan), which has been on the decline for the past few years. Fewer than 200 funds headquartered in greater China collectively raised $36.9 billion last year, the lowest number and dollar amount in at least seven years, according to data collected by PitchBook. Fundraising for China-based funds peaked in 2016, when 376 funds raised a combined $64.4 billion, PitchBook reported.

Unlike Sequoia, Matrix Partners China is reportedly facing a difficult fundraising environment. The Information reported on May 26 that Matrix Partners China VII “is struggling to meet its target of at least $1.5 billion for a new fund from institutional investors in the US and elsewhere, according to three people familiar with the situation. Its fundraising difficulties reflect growing concerns about geopolitical risks as well as China’s weakening economy amid Covid-19 lockdowns.”

Matrix Partners China successfully raised $1.2 billion for its sixth fund in January 2021, according to an SEC filing.

The two managing partners for Matrix Partners China did not respond to an email seeking comment from Venture Capital Journal.

LP mix

Limited partners in Sequoia Capital China’s latest funds include pensions, endowment funds and family offices from the US, Europe, the Middle East and Southeast Asia, reported Bloomberg.

Sequoia did not disclose the names of the LPs in the new funds. Investors in its prior funds include Alaska Permanent Fund, Boeing, Employees’ Retirement Plan of Duke University, Ford Foundation, Metropolitan Life Insurance Company, the University of Michigan Endowment and the University of Texas Investment Management Company, according to PitchBook.

Sequoia Capital China was very active last year. It participated in a record 317 venture rounds and notched 38 exits, up from 165 VC rounds and 26 exits in 2020, according to PitchBook. So far this year, it has done 106 venture deals and had nine exits, including eight IPOs, PitchBook reported.

The firm’s biggest IPO was for ASR Microelectronics, which was valued at $1.08 billion when it went public January 14 on the Shanghai Stock Exchange. The semiconductor maker currently has a market cap of $4.2 billion as of July 4, PitchBook noted.

Sequoia Capital China invests in four key sectors: consumer/service, healthcare, industrial technology, and technology and media and telecommunications (TMT), according to its website.