HSG, the venture capital firm formerly known as Sequoia Capital China, is raising a continuation fund (CV) aimed at taking over part of its ByteDance holdings, according to sources familiar with the matter. The proposed valuation for the social media giant ranges between $350 billion and $370 billion, above levels suggested by recent employee buybacks but below the $480 billion implied by a November secondary-market transaction.

A continuation fund is a mechanism used by private equity and venture firms to transfer holdings of mature investments into a new vehicle, allowing investors in older funds the option to sell their stakes to new participants. HSG plans to move shares from several portfolio companies nearing the end of their investment cycles into the CV, with ByteDance shares expected to dominate the vehicle. HSG currently holds just over 11% of ByteDance, one of the company’s largest external stakes, though it is not yet clear how much of that will be rolled into the new fund.

ByteDance’s valuation has surged in the past year, driven by robust revenue growth and its leadership in China’s consumer AI market through the Doubao chatbot. According to sources, ByteDance’s first- and second-quarter 2025 revenues exceeded those of Meta, making it the world’s top social media company by sales. Full-year profit for 2025 could reach around $48 billion.

The firm’s recent valuation history has been volatile: an employee share buyback in the third quarter of 2025 implied a $330 billion valuation, while a November secondary-market transaction for a ByteDance stake, acquired by Chinese venture firm Capital Today, suggested a $480 billion valuation.

HSG first backed ByteDance in 2014, when the company operated only its news aggregation app Toutiao at a $500 million valuation. HSG separated from Sequoia U.S. in 2024, with founder and managing partner Neil Shen remaining one of ByteDance’s five board members.

Neither HSG nor ByteDance commented on the report. The continuation fund was first reported by AVCJ.