Sequoia Keeps a Public Company and Modifies Fund Structure to Support Cryptocurrencies

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Douglas Lyons, Global Managing Partner of Sequoia Capital, will speak onstage at the second day of TechCrunch Disrupt SF 2018 on September 6, 2018 at the Moscone Center in San Francisco, CA.

Steve Jennings | Getty Images

Over the past half century, Sequoia Capital has established itself as the envy of Silicon Valley, from early bets on Cisco, Apple and Google to recent victories like Zoom, Snowflake and Airbnb. ..

Today, the company completely changed its fund structure, declaring that its current time-based investment model is “obsolete.”

“Our industry is still being overshadowed by the rigorous 10-year fund cycle that began in the 1970s,” Sequoia partner Roelof Botha said in a blog post on Tuesday. “When the chips shrunk and software flew to the cloud, venture capital continued to operate in the floppy disk business.”

Sequoia has abandoned its 10-year venture fund and expects limited partners, who are outside investors, to be repaid over 10 years to contribute to the fund. The company said it would set up a single fund, the Sequoia Fund, to raise money from LPs and channel their capital into a series of smaller funds, which invest their capital in tranches.

Revenue from these funds will be fed back into the Sequoia Fund. Sequoia has no time limit, so instead of distributing public company shares to an LP, it can keep the public company for a longer period of time. Investors who want liquidity can withdraw money instead of waiting for distribution.

Like Andreessen Horowitz two years ago, Sequoia has become a registered investment advisor, giving it more flexibility to invest outside of venture boundaries. This could mean investing money in an IPO, “you can also increase your exposure to new asset classes such as cryptocurrencies and seed investment programs.”

Traditional venture models have been slowly dying out over the past decade as investors around the world and investors across all disciplines fall into endless bull markets. Solo VC has raised funds, other VCs have been linked to online syndicates for seed trading, and on the other hand, private-equity firms and sovereign wealth funds are writing IPO-sized checks.

Venture capital revenues have skyrocketed over the past few years, but Sequoia remains the leader despite warnings at the start of the pandemic that portfolio founders and CEOs “should be prepared for turbulence.” Is done.

The Airbnb logo appears on the Nasdaq digital signboard on December 10, 2020 in Times Square, New York.

Bettencourt | AFP | Getty Images

By the end of 2020, thanks to the introduction of Snowflake, Airbnb, DoorDash and Unity, the IPO market had hit a record low and Sequoia was a major gainer.

In the future, investors will bet on the company Sequoia to invest in the full range of the technology. Sequoia chooses how much to enter into early-stage startups, more mature businesses, secondary, cryptocurrencies, and international transactions.

Without thematic funding, Sequoia doesn’t have to worry about selling shares or distributing company shares to fit the old enterprise structure. If the company is listed and is worth more than $1 trillion within 20 years, Sequoia could still own a significant portion of its shares.

“This new structure removes all anthropogenic temporal perspectives about how long we can partner with a company,” Botta writes.

Imagine that Sequoia never sold a stake in Google.

Look: Former Google executive turns venture capitalist on ESG opportunities

Sequoia Keeps a Public Company and Modifies Fund Structure to Support Cryptocurrencies

Source Link Sequoia Keeps a Public Company and Modifies Fund Structure to Support Cryptocurrencies

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