US venture capital firm GGV Capital to separate China business amid geopolitical tensions
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Ms Jenny Lee, managing partner of GGV Capital, will co-lead the firm's Asia partnership, headquartered in Singapore.
PHOTO: BLOOMBERG
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HONG KONG – US venture capital firm GGV Capital said on Thursday it plans to split its business into two, with one focused on Asia and the other on the United States, as political pressure mounts on American companies to limit investments in Chinese technology.
GGV said in a statement on social media platform X, formerly known as Twitter, that its US partnership will invest primarily in North America, Latin America, Israel, Europe, India and US cross-border deals from offices in Silicon Valley and New York.
Its Asia partnership, headquartered in Singapore, will focus on China, South-east Asia and South Asia, the firm said. It will be led by the managing partners, Ms Jenny Lee and Mr Foo Jixun. GGV’s yuan-denominated funds will continue to be managed independently under its Chinese brand Jiyuan Capital, it added.
The separation will be completed by the end of the first quarter of 2024, GGV said.
GGV’s move follows a similar one by Sequoia Capital
Economic challenges and geopolitical tensions have made fund-raising and investment difficult in the world’s second-largest economy and eaten into global venture funds’ returns.
GGV said in the statement it is evolving against a “highly complex” operating environment.
The firm was put under review by a US congressional committee in July that aimed to investigate American firms over their funding of Chinese technology companies.
GSR Ventures, Walden International and Qualcomm Ventures were among the other names under review.
“GGV’s move is not surprising, and I think it is a correct decision,” said Mr James Huang, founder of Panacea Venture, a China-focused venture firm managing funds denominated in yuan and US dollars separately.
Global investors’ opinions on whether to invest in Chinese start-ups are varied amid growing geopolitical tensions, and dividing businesses with focuses on different regions could help GGV attract investors with different views on China risks, he added.
“I think investors who still feel confident about the Chinese market can contribute capital to GGV’s funds that cover China, while those who feel cautious about China now have the option to work with GGV’s US and Europe-focused business,” Mr Huang said.
GGV Capital, which has around US$9 billion (S$12.3 billion) in assets under management, has backed companies such as Airbnb, ByteDance and Alibaba to establish itself as a cross-border venture capital company. It has over 75 portfolio companies in China, its website shows, including mobile phone maker Xiaomi, social media platform Xiaohongshu and ride hailing champion Didi.
China-focused investment firms, including venture capital, growth and buyout funds, raised only US$5.6 billion in US dollar-denominated funding in 2023, compared with US$20.6 billion in all of 2022.
GGV in February filed to the US Securities and Exchange Commission, targeting to raise US$2.5 billion in a series of new funds, according to public disclosures.
GGV in 2021 said it raised US$2.52 billion in total from four funds, to be run by three Asia-based and three US-based managing partners.
The firm in the same year also raised an approximately 3.4 billion yuan (S$648 million) denominated fund.
It is not immediately clear how the existing dollar-denominated funds will be managed after the separation.
GGV representatives in Asia did not immediately respond to a Reuters request for comment. REUTERS
