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Sequoia reorganisation and lowering fund sizes

Written by Louis-Tchine Pickering, Director of Research

Seqouia Capital has reduce the size of their cryptocurrency fund from $585mn to $200mn, while also halving their ecosystem fund focused on smaller venture funds or solo investors from $900mn to $450mn.

This large reduction is in response to the downturn of private technology companies that has lingered on since 2022, and is meant to help solve liquidity issues for some of their limited partners. Sequoia stated the changes was meant to increase focus towards seed-stage opportunities and ultimately boost liquidity for their limited partners, however, the change could also be attributed to the split off of their Chinese and Indian and South-East Asian entities of “HongShan” and “Peak XV Partners”.

Furthermore, Sequoia also lost a pioneer of the firm, partner Michael Mortiz, who steps down after 38 years at the firm, and one of the leaders in establishing Sequoia as one of the leading investment firms in the world.

Ultimately, looking at the venture market, the ecosystem and crypto investment funds were established at a time when the market was doing well in early 2022, but the success was cut short as rising interest rates damaged start-up valuations, lower public listed stocks, reducing venture investment activity as a whole. The situation has made venture capitalists more careful with their money, as opportunities to earn money has waned. (Conor Moore - KPMG, 2023)

Additionally, Sequoia played a large part in FTX, funding the cryptocurrency exchange, but has faced nothing but damage as FTX collapse and their CEO charged with Fraud, cuasing Sequoia to write down their $214mn investment in FTX to nothing. This probably is a good indicator to Seqouia that they would focus more into their specialism in early-stage companies and explains the reduction in confidence at the moment with their investment activity.


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