Sequoia Capital changes fund structure, launches The Sequoia Fund

Photo: DEALSTREETASIA

Sequoia Capital, one of the world’s top venture capital (VC) firms, announced that it is abandoning the existing time-based model for investing, which it said has become obsolete, and restructuring the firm into a singular, permanent structure.

In a blog post, long-time Sequoia partner Roelof Botha said the firm’s future investment will all flow through The Sequoia Fund, an open-ended liquid portfolio made up of public positions in a selection of the firm’s enduring companies.

The Sequoia Fund will raise money from LPs and then funnel that capital down to a series of smaller funds that invest by stage. The restructuring, however, will focus on Sequoia’s US and Europe business. Sequoia Capital China and Sequoia India will not be part of the restructuring.

The Sequoia Fund will allocate capital to a series of closed-end sub-funds for venture investments at every stage from inception to IPO, with proceeds flowing back into the fund in a continuous loop.

With no time horizon, Sequoia can hold public stock for longer stretches, rather than distributing those shares to LPs

“This new structure removes all artificial time horizons on how long we can partner with companies. It enables us to participate on their boards and help them realize their potential over the course of decades,” said Botha.

The restructuring means Sequoia is abandoning the 10-year venture fund cycle pioneered in the 1970s. The traditional cycle means outside investors that contribute to the fund expect to get paid back over a decade.

“Once upon a time, the 10-year fund cycle made sense. But the assumptions it’s based on no longer hold true, curtailing meaningful relationships prematurely, and misaligning companies and their investment partners,” Botha said.

Additionally, Sequoia is filing with the US Securities and Exchange Commission to become a registered investment adviser, allowing it to invest in emerging asset classes such as cryptocurrencies and support its portfolio companies through various financing events, including secondaries or IPOs.

Sequoia, an early investor in global technology behemoths like Google and Apple, has partnered early and at every stage of growth with the founders of companies that now have an aggregate, public market value of over $3.3 trillion, according to its website.

In June, the firm announced raising over $5.1 billion across three growth funds. The biggest of the three is Sequoia Capital China Growth Fund VI, which attracted total capital commitments of nearly $2.8 billion.

The other two funds are Sequoia Capital US Growth Fund IX, which collected over $1.5 billion; and Sequoia Capital India Growth Fund III with $824.5 million in committed capital, show another two filings dated June 21 and June 17, respectively.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.