Sequoia China labels Reuters report on alleged job cuts as “malicious nonsense”

China’s tech companies have been shrinking their staff sizes.

Source: Unsplash

Yesterday, Reuters reported Sequoia Capital was looking to trim its headcount by 10–20% from about 70 employees.

However, the Silicon Valley venture capital firm’s Chinese arm later refuted the report, labeling it as “nonsense” and “malicious,” affirming that it had hired 13 employees over the past year, and threatened legal action against media outlets that publish false information.

As one of the forerunners in Chinese tech investments, layoffs at Sequoia China could spell trouble for China’s startup network. They also would have mirrored similar cuts across the country’s tech sector, at companies like Didi Chuxing, JD.com, and Tencent.

These moves came after the Chinese government imposed restrictions on debt financing, closing a door for startups seeking capital. They also come amid a climate of lackluster returns on Chinese IPOs and “down rounds” in which startups raise fresh funds at lower valuations.

Chinese VC and PE firms raised USD 1.5 billion (RMB 10.1 billion) for investment in the first quarter of 2019, down 84% year-on-year from USD 9.4 billion, according to Preqin data cited by Reuters.