Decreased Crypto Investment Fund by Sequoia Capital Revealed

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Sequoia Capital has made significant cuts to the size of two of its funds due to the recent downturn in private markets. The firm has reduced the size of its cryptocurrency fund from $585 million to $200 million, and halved its ecosystem fund from $900 million to $450 million. Limited partners, who provide capital to venture capitalists, were informed about these changes in March. Sequoia Capital made these adjustments to focus more on seed-stage opportunities and provide liquidity to its limited partners. Over the past three years, the firm has returned more than $15 billion to its investors. The Wall Street Journal was the first to report on the reduction in fund sizes.

This year has been marked by significant changes for Sequoia Capital. In June, the firm announced its decision to separate from its Chinese entity amidst escalating tensions between the US and China. Additionally, partner Michael Moritz announced his departure from Sequoia Capital after 38 years. Moritz played a crucial role in establishing Sequoia as a leading technology investment group globally. Roelof Botha, Sequoia’s managing partner, expressed his gratitude for Moritz’s contributions.

Venture capitalists are currently facing a challenging landscape as private markets undergo a reset after a decade of growth. Sequoia Capital’s ecosystem and crypto investment funds were launched in early 2022, when the venture market was flourishing. However, rising interest rates and declining economic confidence have led to lower startup valuations, a decrease in public listings, and a slowdown in venture investment. According to Conor Moore, a partner in KPMG’s venture capital practice, venture investors have become more cautious due to the lack of exits.

Cryptocurrency investments have been severely impacted, with several prominent companies in the sector facing regulatory and legal challenges. According to PitchBook, investments into cryptocurrencies and projects have declined by 80% between Q1 2022 and Q1 2023. Sequoia Capital’s notable investment in FTX, a cryptocurrency exchange, led by Sam Bankman-Fried, suffered a collapse in 2022. Bankman-Fried has since been charged with multiple counts of fraud, and Sequoia Capital has written off its $214 million investment. In light of these developments, Sequoia Capital intends to focus its downsized fund on early-stage companies. However, the firm may still consider crypto investments through its other funds.