Sequoia Capital Reportedly Downsizes 2 Major Funds

Silicon Valley venture firm Sequoia Capital has reportedly downsized two major funds due to the downturn in the startup market.

In a move reflecting the changes within tech investing, Sequoia cut the size of its cryptocurrency fund to $200 million from its original $585 million, as well as slashed the size of its ecosystem fund to $450 million from a previous $900 million, The Wall Street Journal (WSJ) reported Thursday (July 27), citing unnamed sources.

Reached by PYMNTS, a Sequoia Capital spokesperson declined to comment on the report.

In addition to reducing the size of the crypto fund, Sequoia has changed its focus from larger companies to younger startups, according to the WSJ report.

The firm announced the two funds in February 2022 and, in the time since, the startup industry has seen a slowdown in deal-making and venture firms have struggled to raise cash, the report said. With the reductions of the sizes of the funds, Sequoia Capital requires less committed capital from investors.

Sequoia Capital has also suffered billions of dollars in paper losses on its holding of public stocks due to last year’s crash of the technology market, per the report. It also felt the impact of the collapse of cryptocurrency exchange FTX, a firm in which it had invested $150 million.

As PYMNTS’ Karen Webster wrote in November 2022, a profile piece published by Sequoia describing FTX founder Sam Bankman-Fried’s (SBF) Series B pitch to the firm’s partners was “breathless in its portrayal of SBF, FTX and the Sequoia’s team conviction that both would change the financial services world forever.”

“Read that profile and you’ll understand why the implosion of SBF and FTX and the crumbling of the crypto ecosystem to follow should take no one by surprise,” Webster wrote at the time.

It was reported July 16 that Sequoia Capital was among the venture capital firms shrinking their megafunds after years of building them up.

“When the money got a little easier, did the marginal investments sneak in? Yes. And that’s why we’re all sort of taking pause and getting back to basics,” Sequoia Capital Partner Alfred Lin told the WSJ at the time.