In the News: GGV Capital Splits Asia Partnership From Rest of Business; Shanghai Recognizes Bitcoin; and China Eases Capital Controls

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GGV Capital Breaks up Its Business, Separates Asia From Rest of Partnership

U.S. venture capital firm GGV Capital plans to split its business into two, with one focused on Asia and the other on the U.S.—a move likely resulting from political pressure on American companies to limit investments in Chinese technology, according to a Reuters report. The U.S. partnership will invest primarily in North America, Latin America, Israel, Europe and India. The Asia partnership, headquartered in Singapore, will focus on China and the rest of Asia. The split will be completed by early 2024. GGV's latest decision followed moves by its peers Sequoia Capital and BlueRun Ventures, who also split their Chinese business.

The economic downturn and geopolitical tensions have made fundraising and deal-making difficult in China, which has decreased the returns of global venture funds. GGV was put under review by a U.S. 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 also put under review. GGV's yuan-denominated funds will continue to be managed independently under the Jiyuan Capital brand. It is not clear how the existing dollar-denominated funds will be managed after the separation.

"GGV's move is not surprising and I think it is a correct decision," said James Huang, founder of Panacea Venture, a China-focused venture capital firm. Global investors' opinions on whether to invest in Chinese startups are varied due to growing geopolitical tensions, and dividing businesses with focuses on different regions could help GGV attract investors with different views on China risks, Huang said. "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 U.S. and Europe-focused business," Huang said.