Sources detail a tumultuous 12 months for Sequoia: spinning off its highly profitable Chinese arm, its FTX and Twitter bets souring, and Michael Moritz leaving
Silicon Valley's premier venture firm undergoes ‘profound change’ after China splits and bets on FTX and Twitter sour X: @bondhack and @refsrc X: Robert Smith / @bondhack : [image] Manish Singh / @refsrc : wow https://www.ft.com/... [image]
Context & Ripple Effects
Sequoia had already set out a three-way reorganization separating its US/Europe, China, and India/Southeast Asia operations, with the China business becoming HongShan under a planned three-firm split. The change followed rising scrutiny of cross-border venture investing, including a reported US official’s intervention over Sequoia-backed Chinese startups and their potential security implications.
The firm was also retrenching in crypto: it had reportedly reduced its dedicated crypto fund and its fund-of-funds vehicle after cutting those investment pools. This report puts that capital reset alongside portfolio losses and a senior leadership departure, making the reorganization an institutional transition rather than a purely geographic one.
First-order effects
- Sequoia must execute the China separation while managing the reputational and portfolio fallout from its FTX and Twitter investments.
- Michael Moritz’s departure removes a longstanding senior figure during a period when the firm is redefining its operating footprint and investment posture.
Second-order effects
- Limited partners and founders will evaluate the successor firms more independently, with the former shared Sequoia brand and cross-border platform becoming less central to fundraising and deal access.
- The crypto pullback and high-profile losses reinforce pressure on major venture firms to show tighter portfolio construction and clearer risk controls.
Third-order effects
- If similar separations persist, geopolitical constraints will increasingly shape venture-capital firm structures, not just the sectors they finance.
- The episode points to a more institutionalized venture model in which global brands divide into regionally accountable firms as political exposure and governance risk rise.
The trend: Venture capital is moving from globally unified partnership brands toward regionally separated, more risk-managed institutions shaped by geopolitical and portfolio scrutiny.