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Sequoia Reduces Crypto Fund by Virtually $400 Million: Report


Sequoia Capital, an funding agency lengthy revered for its direct involvement with Silicon Valley’s intricate internet of enterprise capitalists and tech sector visionaries, has determined to cut back its publicity to cryptocurrencies, in keeping with a confidential supply.

A Reflection of The Market

In a message to traders, Sequoia Capital introduced its choice to cut back its cryptocurrency fund from $585 million to about $200 million, as reported by the Wall Road Journal.

Based on Sequoia, the pivot to extra conventional sectors is a mirrored image of present market situations, during which low-interest loans have gutted by a lot of the tech industries’ wild spending.

Looking for to keep away from the destiny of SVB, Sequoia has additionally downsized its so-called ecosystem fund, which invested in different tech sector startups, to $450 million. Beforehand, this fund was price $900 million.

Decrease Expectations, Smaller Returns

The 2 downsized funds had been initially introduced in February 2022. On the time, they had been already a part of a restructuring plan imposed by Sequoia’s management in response to crypto winter and to the primary indicators of a worldwide recession.

Nevertheless, Sequoia’s crypto (mis)adventures had been merely starting. Later that yr, the corporate misplaced about $150 million when FTX collapsed, prompting the later departure of 5 key companions.

Sam Bankman-Fried, who famously determined to play League of Legends throughout a name with Sequoia relating to a possible funding, unsurprisingly turned out to be a letdown to the traders who “liked this founder.” They allegedly leveraged their very own status selling FTX, which in flip led to a vote of confidence that in any other case may have prevented the ill-fated funding.

“On account of defendants’ vital investments within the FTX entities, every was incentivized to leverage their skilled reputations and media outreach capabilities to painting FTX as a reliable and legit crypto change.”

Commenting on Sequoia’s choice, Conor Moore, a KPMG VC associate, clarified that the transfer was consultant of the funding sector’s growing apathy in the direction of the tech sector – and extra particularly, in the direction of funding wild concepts, or moonshots in r/wallstreetbets parlance.

“Enterprise traders are just a bit extra cautious generally,” mentioned Conor Moore, a associate in KPMG’s enterprise capital apply. “There’s nonetheless cash there to be invested, however the tempo has slowed down as a result of exits have all however stopped.”

Thankfully for Sequoia Capital, the agency was large enough to easily take the loss from FTX and transfer on, going as far as to concern a uncommon apology to traders for the poor judgment.

Nevertheless, the debacle appears to have understandably soured Sequoia’s view of crypto, not less than for now.


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