Chinese technology investment giant Sequoia Capital China plans to give up over 20%of the company’s investment employees as the technology sector in the country is rapidly falling in terms of progress.

Silicon Valley capitalist Sequoia Capital is looking to mow down an estimated 70 investment workers. Two people familiar with the company predicts that about 10% of the employees may be terminated. Sequoia China reveals that they review the workforce regularly, which may lead to shifts in personnel. Sequoia China accepted 13 investment professionals into the company over the previous 12 months, increasing their total employees.

However, a spokesperson from Sequoia China recently revealed that the termination plans were false. The employee layoff is the result of start-up businesses trying to accumulate fresh capital in small amounts while the government is starting a campaign versus debt financing. Also, investors are in despair after returns from recently public firms fail to meet expectations. The market’s instability also makes firms experience down rounds, which means that valuation for those companies fails to meet the tally from the previous round of fundraising.

According to data analysis company Preqin, private equity managers and Chinese venture capital only made $1.5 billion in all investment aspects of the market during the first quarter of 2019, which is well below last year’s $9.4 billion total.

Due to the unstable industry situation, major technology firms have decreased salaries and personnel to continue progress amid the slow-moving economy and the problematic trade negotiations between China and the US. Despite the problems, tech companies try to find opportunities to grow.

Sequoia China’s employee layoff started to affect many venture capital endeavors other than technology. Healthcare, consumer and industrial technology, and technology and media also took a hit and forced the teams to terminate personnel as well.

During the cuts, some investment professionals agreed to resign from Sequoia China. The list of personnel making the sacrifice includes a managing director, several associates, vice presidents, and one partner. The terminations are comparable to other moves of the companies in the Chinese tech industry.

Ride-hailing company Didi Chuxing plans to remove 15% of its staff. Sina Tech media stated that Inc. plans to terminate 10% of the senior executives within the year. Bloomberg also reported that Tencent Holdings Ltd also plans to let go of about 10 percent of the managers.

Sequoia China’s Journey to Development

Entrepreneur Neil Shen founded Sequoia China in 2005. During its first years, the company has over 150 people in offices located in Hong Kong, Shanghai, and Beijing, among other parts of China. Some of the investments made by Sequoia China include and Alibaba Group Holding Ltd, which is a rival company. The firm also made investments for businesses with a fast growth rate like Beijing Bytedance Technology, Meituan Dianping, and Didi Chuxing.

Sequoia China is known for its mastery of creating deals of venture capitals with companies. However, it is trying to put its focus on seed investment to funding as the time approaches for initial public offerings. Just last year, Sequoia China made 150 million USD during the first seed fund while making 1.8 billion USD during the fifth growth fund, which is the most significant amount made of the kind.

According to the data provided by Preqin, the young seed and late-stage investments made by teams do not seem to suffer the effects of the recent layoffs plaguing the tech industry. However, one person familiar with Sequoia China revealed that seed teams would also experience layoffs within the coming months.