Venture capital firm HSG, formerly Sequoia Capital China, is raising a follow-on fund that will take on some of its ByteDance shares at a valuation of between $350 billion and $370 billion, two people with knowledge of the matter said.
A continuation fund (CV) is a new vehicle issued by a private equity firm to transfer stakes in existing investments. Its valuation is higher than that implied by the recent share buybacks of ByteDance, owner of TikTok, but lower than that indicated by the acquisition of a stake in November.
HSG intends to transfer shares in several fund-backed portfolio companies that are nearing the end of their investment cycle to CV, the two sources and a third person with knowledge of the fundraising said.
Limited partners, or investors in the maturing funds, will have the option to sell their stakes in those portfolio companies during CV’s fundraising to other investors.
ByteDance shares will dominate the new vehicle, said the three sources, who asked not to be identified because the information is not public.
HSG owns just over 11% of ByteDance and is one of the social media giant’s largest outside shareholders, according to one of the sources. It is not clear what percentage of that participation will be incorporated into the CV.
HSG declined to comment. ByteDance did not respond to a request for comment. Trade publication AVCJ was the first to report on the CV on Wednesday.
ByteDance’s valuation has soared over the past year, driven by strong revenue growth despite TikTok’s lengthy U.S. spinoff process.
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ByteDance’s first and second quarter 2025 revenues surpassed Meta’s, becoming the world’s No. 1 social media company in terms of sales, Reuters reported.
Revenue continued to grow in the next two quarters and ByteDance’s annual profit in 2025 could reach around $48 billion, said one of the sources and a separate person familiar with the company’s financial details.
It also emerged as China’s leading player in consumer AI applications in 2025 thanks to its chatbot Doubao, which has the country’s largest market share by monthly active users.
In November, Chinese venture firm Capital Today won an auction to acquire a portion of ByteDance shares from Bank of China’s private equity arm in the private secondary market, valuing the company at $480 billion, one of the sources and a fifth source said.
The two companies did not respond to Reuters requests for comment.
In the third quarter, ByteDance launched an employee share buyback at a valuation of more than $330 billion, up 5.5% from the previous buyback in March, sources said.
In November, the company offered existing investors a new round of share buybacks at a valuation similar to the employee share buyback, a sixth person familiar with the situation said.
HSG first invested in ByteDance in 2014 when it was part of the Sequoia Capital family in a funding round that valued the company, which then operated only its popular news aggregation app Toutiao, at $500 million, according to previous media reports.
HSG was spun off from Sequoia US in 2024. Its founder and managing partner, Neil Shen, remains one of the five members of ByteDance’s board of directors.
With information from Reuters
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