US venture firm GGV Capital to spin off China operations

Venture firm GGV Capital said on Thursday that it would separate its American and Asian operations, joining several other US firms that have made similar moves as Washington looks to restrict investments in sensitive Chinese technologies.

The split, expected to be completed by the first quarter of next year, would turn GGV into two “completely independent” partnerships with distinct branding, the company said in a statement.

The US partnership, based in Silicon Valley, will be headed by managing partners Glenn Solomon and Hans Tung, among others. The Asian business, headquartered in Singapore with a focus on China, Southeast Asia and South Asia, will be led by managing partners Jenny Lee and Jixun Foo.

GGV’s yuan-denominated funds will continue to be managed independently under the Jiyuan Capital brand, led by managing partner Eric Xu.

GGV, which has about US$9.2 billion in assets under its management according to Chinese consultancy ITJuzi.com, ascribed the move to operational challenges brought about by a changing investment environment.

“Over the last decade, the investment landscape has shifted significantly, and the operating environment has become highly complex,” the company said.

GGV did not immediately respond to a request for additional comments.

GGV is among a vanguard of US venture firms that started investing in China in the early 2000s, when the local technology start-up sector was on the cusp of meteoric growth, thanks to the fast-rising popularity of the mobile internet.

Since its arrival in China in 2005, GGV has been one of the most prominent American backers of Chinese tech firms. Its expansive portfolio encompassed companies that have since transformed into industry titans, including e-commerce giant Alibaba Group Holding, ride-hailing behemoth Didi Chuxing and TikTok parent ByteDance, currently the world’s most valuable start-up.

While GGV did not directly mention geopolitical pressure in its statement, some of the firm’s bets in China have drawn the ire of US lawmakers advocating tighter scrutiny on American backing of sensitive technologies in China, as the world’s top two economies lock horns over trade and capital flows.

In the letter sent to GGV, the committee cited a recent study by the Centre for Security and Emerging Technology that said the firm conducted 43 investment transactions with Chinese AI companies from 2015 to 2021, more than any other firms examined by the Washington-based think tank.

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GGV’s latest decision followed similar moves by its peers Sequoia Capital and BlueRun Ventures, both of which set foot in China in the same year that GGV opened its first China office in Shanghai.