US-headquartered venture capital firm Sequoia Capital on Tuesday announced its breakup into three distinct firms with separate geographical identities that will operate independently of each other. The US and European VC business will continue to be known as Sequoia Capital, the China business will adopt the name HongShan, while Sequoia India and Southeast Asia will become Peak XV Partners.

The separation process is expected to be completed by 31 March 2024, Sequoia Capital said in a letter signed by Roelof Botha, Neil Shen and Shailendra Singh, who will lead the US/Europe, China and India/SEA businesses, respectively. In interviews with Forbes, the trio cited conflict between the funds’ respective startup portfolios, brand confusion as they diverged in strategies, and increasing complexity of maintaining centralized regulatory compliance as factors behind the split, while acknowledging a frostier geopolitical environment.

“It has become increasingly complex to run a decentralized global investment business,” Botha, Shen and Singh wrote in the letter. “This has made using centralized back-office functions more of a hindrance than an advantage. Additionally, as each entity’s portfolio has expanded to include companies that are becoming global leaders, we’ve seen growing market confusion due to the shared Sequoia brand as well as portfolio conflicts across entities.”

China concerns: Sequoia’s announcement comes amid a challenging time for American VC firms that invest in China. The Joe Biden administration has been looking to curb foreign investments in China and restrict the flow of US dollars into the country, where Sequoia has played a big part in fuelling the growth of the consumer internet sector for two decades, according to TechCrunch. The move aligns with the broader strategy of impeding China’s progress in critical technologies such as artificial intelligence, quantum computing and semiconductors.

India story: Peak XV Partners, the rebranded India and Southeast Asia arm, will continue to manage $9.2 billion across 13 funds and invest in startups using $2.5 billion in uninvested capital that remains in its corpus. “Our firm will continue to be managed by the present leadership team and will continue to invest from the most recently raised set of funds focused on India and SEA,” Shailendra Singh, managing director of the India and Southeast Asia business, said.

Read | What does the split from parent mean for Sequoia India?