Susquehanna, an Early Backer of ByteDance, Is Stepping Back From China Venture Deals
The Takeaway
- Susquehanna winds down China venture team amid rising geopolitical tensions.
- Tim Gong, SIG China managing director, will launch a new fund.
- Firm remains a major ByteDance shareholder despite China venture exit.
U.S. investment firm Susquehanna International Group, one of ByteDance’s biggest shareholders, is winding down its China-based venture investment team, another sign of the challenges facing U.S. venture investors operating in China.
SIG China’s managing director, Tim Gong, who ran the team, is expected to leave the firm, according to four people with knowledge of the situation. Other venture employees are expected to leave as well. Gong is expected to launch his own fund, three of the people said, and some of his employees may join him.
Susquehanna isn’t abandoning China. The firm is expanding its market-making activities in the country, one of the people said. But rising geopolitical tensions have made it increasingly difficult for U.S. venture investors to stay competitive in China. The U.S. government has restricted investments in China’s high-growth sectors such as AI and semiconductors.
Other major American investment firms have cut their ties to China due in part to geopolitical tensions. Silicon Valley VC giant Sequoia Capital separated its Chinese arm, Sequoia Capital China, in 2023. GGV Capital, an early investor in Alibaba, split up its Asia and U.S. operations in 2024.
In more than two decades of operating a venture arm in China, Susquehanna invested more than $3.5 billion across more than 350 deals in the country, its website shows. But it has cut back in the past few years. The firm has invested in only nine deals since 2023, according to Chinese venture capital database IT Juzi.
SIG China will keep just a handful of employees to look after investments that the firm has yet to exit, most prominently its stake in ByteDance, worth at least tens of billions of dollars. Its website lists 22 employees, including partners, investment professionals, venture consultants and portfolio management teams.
Gong, who joined SIG China in 2006, is seeking to raise at least $100 million in his new fund. SIG may invest in the fund, according to two of the people.
Early to ByteDance
SIG China earned respect in China’s venture scene by being the first institutional backer of ByteDance in 2012, when the startup was just a few months old and had just one main product, Toutiao (which means ‘Headlines’), an AI algorithm–powered online news aggregator.
ByteDance later became a global giant through the success of its short video app, Douyin, in China and TikTok’s popularity overseas. (Last year ByteDance sold part of TikTok’s U.S. subsidiary in charge of data security to a venture controlled by U.S. investors to resolve longstanding national security concerns about TikTok in the U.S. ByteDance still controls TikTok’s commercial U.S. operations.)
SIG China owned 15% of the TikTok parent, The Information reported in 2020, although it’s unclear how many shares it owns now. But every sign suggests it remains a major shareholder. Arthur Dantchik, one of SIG’s co-founders, still sits on the board of ByteDance. Jeff Yass, another co-founder, is a major donor to President Donald Trump and the Republican party.
Moreover, a Susquehanna affiliate is an investor in the new TikTok USDS joint venture, and a Susquehanna executive, Mark Dooley, sits on the joint venture’s board. At least one of the SIG funds that holds ByteDance shares was due to expire last year, before SIG extended its lifetime for another year, according to one of the people.
The regulatory and geopolitical challenges ByteDance has faced, in both China and the U.S., helps make the company’s path to an initial public offering uncertain.
Cutting Back
SIG was founded in 1987 by a group of six college friends who met at the State University of New York at Binghamton. The Bala Cynwyd, Pa.–based company is low profile and subdued compared to the glamorous blue chip firms on Wall Street or in Silicon Valley. After making a fortune from high-frequency and quantitative trading, SIG started doing venture investments, beginning in China in 2005.
The U.S. venture arm, Susquehanna Growth Equity, was established one year after the China arm. In 2014, SIG also set up a fund dedicated to Japan. The private equity and venture arms are fully funded by SIG itself, with no outside backers.
Aside from the early ByteDance investment, other notable deals by SIG China include film studio Bona Film Group, music platform Ximalaya, online game company Giant Network and restaurant chain Country Style Cooking.
Gong, who has a doctorate in electrical engineering from Princeton University, worked for telecom firm UTStarCom and also founded his own startup before joining SIG China. He is already looking for deals for his new fund and has already made one investment, in an Asian prediction market app called Bagel, which is led by a Chinese founder, according to one of the people with knowledge of Gong’s new fund.