HongShan, a Sequoia spinoff, faces challenges deploying its significant investment fund
HongShan, the Chinese investment firm that was spun off from Sequoia Capital in 2023, is expanding aggressively into Europe and North Asia.
This is due to the fact that there are “shrinking options” in China and that limited partners have become frustrated with the slow deployment of the $9 billion in capital commitments that HongShan secured two years ago, according to the Financial Times.
(LPs are typically required to pay management fees on capital, even if it has not been utilized, as the FT observes.)
The nearly 20-year-old firm, which is headquartered in Hong Kong, has expanded its investments in existing Chinese portfolio companies, including ByteDance, the parent company of TikTok, and Xiaohongshu, an Instagram clone. It is also investing in robotics and AI ventures that are based in China.
However, HongShan’s reported intentions to establish an office in Tokyo, in addition to a variety of new investments in new regions, indicate that the company is seeking returns that are more far-reaching.
Indeed, the Financial Times notes that it may encounter its erstwhile partner, Sequoia, more frequently now that it has established an office in London. Sequoia, too, has a London office.
