Sequoia China participated in Grail's Series A financing in 2014, and the latter was valued at about 500 million yuan in 2017. Based on this estimation, Sequoia China's investment performance is good. Since the tightening of IPO, Sequoia China has successively reduced its shareholdings in 12 A-share listed companies, such as Dongpeng Holdings and Muyuan Shares. As of the first quarter report, Sequoia China still holds 18 A-share listed companies.
On June 20th, according to the "Star Daily", Brilliance Vision (688207) recently announced that Sequoia China has accumulated 5% reduction through bulk transaction and concentrated auction transaction, and the shareholding ratio has decreased from 10.49% to 5.49%. According to the disclosure, the equity change time is from April 19, 2023 to June 18, 2024.
"Star Daily" reporters noted that Brilliance Vision was listed in March 2022. As an investor before IPO, Sequoia China participated in Brilliance Vision's Series A financing in 2014. According to the prospectus, Brilliance Vision's latest round of Series B financing in January 2017 was valued at about 500 million yuan, which means that as an early investor, Sequoia China invested in Brilliance Vision at a valuation lower than 500 million yuan.
During the above-mentioned reduction period, Brilliance Vision's highest market capitalization exceeded 7 billion yuan, which increased by 1300% compared with the valuation of 500 million yuan after Sequoia China entered. Therefore, Sequoia China's investment returns were not bad.
Sequoia China exits Brilliance Vision after 7 years of investment.
From the time when Sequoia China invested in Brilliance Vision, it was the first wave of AI rise in China. In addition to Brilliance Vision, the earliest "AI Four Little Dragons" also had the figure of Sequoia China.
According to the Brilliance Vision prospectus, before the IPO, Sequoia China held 19.4 million shares, accounting for 13.99% through Sequoia Capital CV IV Holdco IX, Ltd .; after the IPO, the proportion changed to 10.49%.
According to the one-year lock-up period, Sequoia China unlocked in March 2023, one year after Brilliance Vision went public. Through equity change information, Sequoia China began to reduce its holdings in May 2023, with 1.85 million shares changed at that time. Afterwards, it reduced 2.3 million shares in late May 2023, reduced 800,000 and 770,000 shares respectively in July 2023, reduced 1.57 million shares in August 2023, reduced 1.81 million shares in September 2023, reduced 670,000 shares in December 2023, and reduced 1.91 million shares again on June 18th this year.
Since then, Sequoia China's accumulated 5% equity change is completed. It is worth mentioning that Brilliance Vision released a dividend plan of "10 shares for 4 shares" in 2022, which increased Sequoia China's shareholding by 4.94 million shares in the middle of last year.
During the above-mentioned reduction period, Brilliance Vision's stock price reached a high of 30 yuan, which means that Sequoia China, which invested for 7 years, had a good return on its exit. An industry insider told "Star Daily" reporters that the main business of Brilliance Vision is computer vision technology and big data analysis technology. In practical applications, AI vision is a verified field in the first wave of AI. "In the past, AI vision has been successfully applied in security, transportation, retail, industrial quality inspection, and so on. So are the AI Four Little Dragons. The problem is that many AI vision algorithms can only perform well on specific data sets and are not suitable for multiple environments and conditions, and their generalization ability is poor."
"Star Daily" reporters noticed that not only Sequoia China, but Zhen Partners I (HK) Limited, under the leadership of Xu Xiaoping, which invested in Brilliance Vision together with Sequoia China, is also exiting. Equity change data shows that they reduced their shareholding from 5.99% after listing to 3.93% in the first quarter of 2024, after the unlock.
"The first stock of Star Market AI" halo disappeared, Brilliance Vision continued to lose money.
In fact, when Brilliance Vision was listed, it had the halo of "the first stock of Star Market AI". Its founder, Zhao Yong, graduated from the Department of Electronic Engineering of Fudan University as an undergraduate, Fudan University as a masters, and the Department of Computer Engineering of Brown University in the United States as a doctorate; he was an image processing architect for Android and also one of the earliest core developers of Google glasses. These labels and experiences of the founder added points to Brilliance Vision, making it a star company in the eyes of institutions.
However, from the performance after listing, this halo has disappeared. In terms of stock price, Brilliance Vision not only broke on the first day, but also currently has a stock price of only about 12 yuan, with a market value of 3.2 billion yuan. In February of this year, Brilliance Vision's stock price once fell to 9.95 yuan/share. Behind the decline in the stock price is the continued losses of the company's performance.
Taking a longer view, Brilliance Vision lost money in 5 of the latest 6 years. The financial report shows that from the end of 2018 to the end of 2023, Brilliance Vision's net profit attributable to the parent company was -69.9 million yuan, -413.5 million yuan, -77.87 million yuan, -68.42 million yuan, 32.61 million yuan, and -90.33 million yuan, respectively. The performance is far from the institutions' original expectations for investing in AI companies.
An investor told "Star Daily" reporters that Brilliance Vision's main business is computer vision technology and big data analysis technology. In practical applications, AI vision is a verified field in the first wave of AI. "In the past, AI vision has been successfully applied in security, transportation, retail, industrial quality inspection, and so on. So are the AI Four Little Dragons. The problem is that many AI vision algorithms can only perform well on specific data sets and are not suitable for multiple environments and conditions, and their generalization ability is poor.""To improve the generalization ability, it is a challenge to obtain high-quality and large-scale annotated data sets. Therefore, until now, even after ChatGPT has started a new wave of AI investment boom, there are still no AI companies with significant profits." The investor believes that it is also a challenge for Brilliance Vision, the first generation AI company, to have stable profitability.
"Star Market Daily" reporters noted that not only Sequoia China, but Zhen Partners I (HK) Limited, under the leadership of Xu Xiaoping, which invested in Brilliance Vision together with Sequoia China, is also exiting. Equity change data shows that they reduced their shareholding from 5.99% after listing to 3.93% in the first quarter of 2024, after the unlock.
Sequoia China has successively withdrawn from.
The reporter of the Science and Technology Innovation Board Daily noticed that since the A-share IPO stage tightened, "withdrawal" has become a key word for investment institutions.
According to incomplete statistics from Star Mining, since August 2023, Sequoia China has successively reduced its holdings of 12 companies, including Dongpeng Holdings (003012), Muyi Shares (001323), Baichuan Changyin (300614), Shenzhen New Industries Biomedical Engineering (300832), Winner Medical (300888), Marssenger Kitchenware (300894), Iray Technology (300942), Purui Eye (301239), Brightgene Bio-Medical Technology Co.,Ltd. (688166), Gridinsoft Anti-Malware (688207), Innotek (688253), and Inno-Ray Technology (688301).
Among them, most of the companies had reductions in previous years, and only a few companies had their first reduction since August last year. Specifically, Dongpeng Holdings (003012) was the most withdrawn by Sequoia China, with a total reduction of 10.66 million shares since last August; Shenzhen New Industries Biomedical Engineering (300832) was also withdrawn by Sequoia China in one go at the end of 2023, with a reduction of 15.71 million shares. The other company with a total reduction of millions of shares is Brightgene Bio-Medical Technology Co.,Ltd. (688166). Star Mining data shows that Sequoia China has cumulatively withdrawn 11.5 million shares since the third quarter of last year.
Regarding these reduction actions, some investors who exchanged views with the Science and Technology Innovation Board Daily reporter said that "fundraising and management withdrawal" is the normal investment order of investment institutions, and it cannot be said that there are only investments, no withdrawals. "After the A-share IPO stage tightened, the topic of private equity investment relying too much on listing withdrawals has been the focus of the industry."
It further stated that currently, although there is a restart of IPOs, changes in policies and economic environment, as well as failure of listed companies' performance and research and development to meet new requirements, has led to a sharp increase in IPO withdrawals. Even after going public, the exit proceeds may be lower than expected, especially if performance falls short of expectations, which will cause a decline in stock prices; Hong Kong-listed companies also face a problem of insufficient liquidity, which leads to small trading volumes of stocks and makes it difficult for investors to exit at ideal prices.
The first quarter report shows that Sequoia China appears in the shareholders' list of 18 A-share listed companies, including 8 Science and Technology Innovation Board companies, 8 Growth companies, and 2 SMEs. From the perspective of the listing time of these companies, 2019-2020 was the harvest period of Sequoia China's IPO, and 2019 was the time when Science and Technology Innovation Board was established.
