Sequoia China raises $9 billion amid liquidity crunch

Lavina Daryanani
Source: ET

Neil Shen’s Sequoia China has reportedly raised around $9 billion for investments in tech and healthcare. The venture capital industry, as such, has been plagued by a liquidity crunch, and Sequoia is to raise funds in such a situation that people from space have lauded.

Per Bloomberg’s unnamed sources, the company has raised the money from pensions, endowment funds, and family offices from the US, Europe, the Middle East, and Southeast Asia.

As far as the allocation is concerned, the report noted,

“The money will be allocated to four funds: 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, the people said. Investors oversubscribed by about 50%, but the firm decided to stick to its original goal range, they added.”

Notably, the final amount of the raise is the biggest pool of capital ever raised by a single VC firm focused on Chinese tech startups.

Sequoia in the driver’s seat?

The company, as such, is quite optimistic about China’s progress. However, with apprehensions surrounding regulations and economic growth, most other stalwarts remain on the other side of the page for now. The decline in the nation’s major stock market index backed the latter group’s inclination.

Despite investors re-evaluating their China exposure, Sequoia has attracted the bulk of funds. In the said process, other under-exposed and smaller firms have found it challenging to find their feet.

In fact, per data from research firm Preqin, the value of deals in China fell by around 40% to $34 billion in the first five months of this year compared to 2021. Alongside, venture capital and private equity funds cumulatively raised $6.2 billion, marking a decline of more than 90% relative to last year.

Sequoia China, on its part, has lent helping hands to several crypto and blockchain-related firms. Babel Finance was one of the latest ones added to the list post it halted withdrawals in mid-June.

Alongside, Sequoia was also part of the lead investors who chipped in Babel’s $40 million Series A funding round in May this year.

China, as such, has maintained a hot-and-cold relationship with crypto throughout history. However, that hasn’t stopped the likes of Sequoia make their presence felt. Despite several crackdowns being imposed, companies and other entities like miners and investors have discovered loopholes and found their way in and out.