Sequoia's former China unit HongShan is pushing for deals in Europe and North Asia, as it struggles to deploy $9B due to a weak domestic market and US controls
Context & Ripple Effects
HongShan’s overseas push extends a repositioning that began with its Singapore office and Southeast Asia ambitions and its subsequent search for global opportunities as China’s economy slowed. The firm’s separation from Sequoia does not remove the practical challenge of finding investable markets for a large China-focused capital base.
The pressure is sharper because HongShan’s 2022 $9B fund was raised around chips and AI, while US controls and a weak domestic market now constrain deployment. Its later yuan-denominated fund illustrates how fund currency can determine which sensitive-tech opportunities remain accessible.
First-order effects
- HongShan must direct more sourcing, diligence, and portfolio-support capacity toward Europe and North Asia rather than relying chiefly on China for new investments.
- Companies in those markets gain access to a large investor seeking deployment, while HongShan’s existing capital faces a more geographically complex investment mandate.
Second-order effects
- The move raises competition for cross-border technology deals with regional and global venture firms, particularly where HongShan can offer China-market experience or support to portfolio companies.
- Fund structure becomes more consequential: capital raised in different currencies and jurisdictions may be routed toward different sectors and geographies as policy constraints narrow a fund’s usable opportunity set.
Third-order effects
- If this persists, venture firms with China roots may evolve from nationally concentrated investors into more fragmented regional platforms, with separate pools of capital serving distinct regulatory regimes.
- The pattern points to geopolitical controls influencing not only technology supply chains but also where private capital can be deployed, potentially reshaping who finances strategically sensitive startups.
The trend: Geopolitical and market constraints are increasingly segmenting venture capital by geography, currency, and technology exposure.