In one of the largest secondary moves in venture history, HSG (formerly Sequoia China) is actively managing its massive position in the world’s most valuable unicorn.
The firm is raising a Continuation Fund to roll over maturing stakes in ByteDance, setting a valuation mark of $350 billion to $370 billion.
💰 THE VALUATION SPREAD: Pricing a giant like ByteDance is complex. HSG’s target sits in a strategic middle ground:
- The Floor: Above the ~$330B valuation set by the recent employee share buyback.
- The Ceiling: Below the $480B valuation implied by a November secondary transaction (Capital Today / Bank of China).
- The History: HSG first invested in 2014 at a $500M valuation.
🚀 THE FINANCIAL ENGINE: Why hold on? The fundamentals are staggering.
- Flipping Meta: Reports confirm ByteDance’s revenue topped Meta’s in both Q1 and Q2 2025.
- Profit Power: 2025 annual profit is projected to reach ~$48 billion.
- AI Leadership: Its chatbot, Doubao, has captured the #1 market share in China for consumer AI apps.
⚙️ THE MECHANICS: With HSG owning just over 11% of the company, this vehicle solves a critical liquidity issue. It allows legacy Limited Partners (LPs) to cash out of older vintage funds while letting HSG (led by board member Neil Shen) retain exposure to ByteDance’s continued growth without being forced to sell into a depressed IPO market.
💡 ANALYST TAKEAWAY: The Continuation Fund is the “IPO alternative” for 2026. With ByteDance generating $48B in profit—more than most public giants—the pressure to go public is diminishing. HSG’s move signals they believe the upside from here (likely driven by AI monetization and TikTok Shop) outweighs the risk of holding an illiquid asset of this size.
👇 PE & VC Pros: Is a $370B valuation conservative given they are out-earning Meta, or does the geopolitical risk discount warrant a lower price?