GGV, a well-established U.S. venture capital firm specializing in investments in China, has announced its decision to split into two separate branches following increasing geopolitical tensions between the United States and China. The move comes in response to the ongoing push for decoupling between the two superpowers.
Key Takeaway
GGV, the U.S. venture capital firm known for its successful investments in Chinese tech companies, is splitting into two separate entities amid increasing geopolitical tensions between the U.S. and China. The decision comes after facing scrutiny by a congressional committee over funding Chinese tech companies. This move mirrors a similar strategy employed by Sequoia earlier this year. GGV’s U.S. branch will focus on investments in North America, Latin America, Israel, Europe, and cross-border businesses between India and the U.S., while its Asian branch will concentrate on China and Southeast Asia. President Biden’s executive order banning U.S. investments in critical Chinese sectors further fuels the separation between China tech and U.S. fundings.
Unlike many other firms, GGV has a rich history of successful investments in prominent Chinese companies such as ByteDance, Xiaomi, and Alibaba. In a statement released on Thursday, GGV revealed its plans to create independent units in the U.S. and Asia, with the reorganization set to be completed by the end of the first quarter of 2024. This move echoes a similar strategy recently implemented by Sequoia, which decided to separate its China and India arms from its U.S. operations in June.
The decision to split is believed to be a direct result of the increased scrutiny faced by GGV and three other American investment funds. Three months ago, a congressional committee launched an investigation into these funds’ financing of Chinese tech companies involved in sectors such as semiconductors, artificial intelligence, and quantum computing.
“Over the last decade, the investment landscape has shifted significantly, and the operating environment has become highly complex. Against these new realities, GGV is also evolving,” explained GGV in their official statement.
The U.S. branch of GGV, led by managing partners Glenn Solomon, Hans Tung, Jeff Richards, and Oren Yunger, will primarily focus on investments in North America, Latin America, Israel, Europe, and cross-border businesses between India and the U.S. Meanwhile, the Asian branch, headed by managing partners Jenny and Jixun Foo, will concentrate on China, Southeast Asia, and South Asia from its regional headquarters located in Singapore.
It is important to note that GGV’s RMB funds will continue to be independently managed under the Chinese brand Jiyuan Capital, with Eric Xu leading the operations.
GGV and Sequoia are not the only firms being asked to separate their Chinese operations. In August, President Biden signed an executive order prohibiting U.S. investments in critical sectors such as AI, semiconductors, and quantum computing in an effort to curb China’s military ambitions. Other firms, including GSR Ventures, Qualcomm Ventures, and Walden International, were also subject to scrutiny by the congressional panel alongside GGV.
