Huh, well Silicon Valley’s most respected venture capital firm, Sequoia Capital, has taken an agrarian turn.
It has just invested $63 million into a publicly traded Chinese dairy company, American Dairy Inc., which distributes infant formula, milk powder and soybean, rice and walnut products in China.
Sequoia Capital has steadily been diversifying its geographical focus, increasing its investments in places like China and India. And because technology startups are not as attractive in those regions, it’s backing companies that have nothing to do with tech. Two years ago, we wrote about its investment in a company called China Linong that grows and sells high-end vegetables. The Sequoia’s man in China, Neil Shen, has said his philosophy is to “stick to the four necessities: Food, clothes, housing and travel,” and he’s not kidding around.
Of course, it’s hard not to notice that this comes at a time when Silicon Valley is in a serious funk — boasting a depressing number of initial public offerings and sales. So Sequoia’s move abroad may be prudent. However, Sequoia earned its reputation backing the most powerful and legendary technology companies in the Valley, such as Apple, Yahoo, PayPal, YouTube and Google and Cisco — indeed, it gets to crow about those investments on its home page, with pictures of all of the famous entrepreneurs it has backed. Sequoia was early in the Silicon Valley game, and that’s in part what gave it an early advantage. Success bred success as hungry entrepreneurs flocked to Sequoia first for funding because it had the best reputation in town. The trouble with investing in public Chinese dairy companies, or other late-stage companies, is that these sorts of deals can be done by investors with more general backgrounds — and it’s not clear how Sequoia has a special edge at that game for the long haul.
In India, at least, it has momentum. It just got a glowing review in India’s Outlook Business, for being the most prolific investor in that country. But it’s noteworthy that its investments there have been more tech oriented than other investors there. And Sequoia’s activities have grown, even as a bunch other of competitors fall by the wayside.