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Silicon Valley venture firm GGV Capital is splitting into two independent businesses focused on Asia and the US, three months after rival Sequoia Capital made a similar move in response to mounting political pressure on American tech investors to disengage from China.
The separation of its Singapore-based operations from its current US headquarters, which are split between Menlo Park in California and New York, is expected to complete early next year, according to people with direct knowledge of the matter.
GGV, which has around $9bn in assets under management, according to PitchBook, has held stakes in some of China’s most prominent tech companies — including Alibaba, TikTok’s parent ByteDance, smartphone maker Xiaomi and ride-hailing service DiDi. In the US, its portfolio companies have included home rentals site Airbnb, business messaging service Slack and fintech Affirm.
Its decision to split comes as cooling relations between Washington and Beijing and an increasingly fierce technology arms race have limited the room for manoeuvre for US investors, who have profited for years by betting on a booming Chinese tech sector.
GGV’s investments have come under particular scrutiny in the past six months. In July, the US House of Representatives committee on the Chinese Communist party wrote to the firm requesting information about its holdings in China, alongside other US tech investors in the region.
In 2019, GGV invested in Megvii, which creates facial recognition software. That investment was singled out by Michael Gallagher, the congressional committee’s Republican chair, who alleged in the July letter that Megvii “actively supports the surveillance of Uyghurs”, the ethnic minority from the western Xinjiang region Beijing has been widely accused of repressing.
In August, President Joe Biden issued an executive order seeking to stem the flow of US capital into Chinese technology sectors that might bolster the country’s national security, particularly advanced chips, artificial intelligence and quantum computing.
Sequoia announced in June that it would separate its China and US arms, ending a two-decade relationship widely regarded as Silicon Valley’s most successful effort to build a global venture capital business. HongShan, as Sequoia Capital’s Chinese arm is now known, has this year set up an office in Singapore.
GGV’s Asia operation will also be based in Singapore, which has attracted several China-focused private equity and venture capital groups in recent years.
Chinese fund managers with US dollar funds including Hillhouse, Boyu Capital and Shunwei Capital, which have made their reputations with big bets on Chinese tech start-ups, have expanded or opened offices in the south-east Asian city-state in the past few years.
Following the split, GGV’s US-headquartered company will be led by Glenn Solomon, Hans Tung, Jeff Richards and Oren Yunger. The Asia business will be led by Jenny Lee and Jixun Foo, and will continue to invest in China as well as the rest of the region, according to people with direct knowledge of the matter.
Additional reporting by Kaye Wiggins in Hong Kong
Source: Financial Times