Somber Sequoia – FTX Mistake 🌳

Somber Sequoia – FTX Mistake

Sequoia is one of the biggest names in the venture capital world. Indeed, the firm has over 85 billion dollars under management (placing it third in the world after Tiger Global Management and New Enterprise Associates). Since its origin, the firm has seen strong growth and performance. Sequoia’s first few investments as part of their original $3 million fund included Apple and Atari. Sequoia’s name comes from the Sequoia tree, which lives for thousands of years. Despite the origin story and long-term success, the recent news surrounding Sequoia and its investments hasn’t been so hot. As an early backer of FTX (investing in the Series B round back in July of 2021), Sequoia backed FTX financially and reputationally: publishing an article heralding FTX founder Sam-Bankman Fried as a crypto savior and a genius founder before more recently taking the article down. 

Sequoia wasn’t the only one fooled. Earlier this year, FTX raised $400 million in a Series C round, bringing its total funding to $2 billion and its valuation to a breathtaking $32 billion. Ironically, it was also revealed that Sam-Bankman Fried was playing the video game League of Legends while on a Zoom meeting with Sequoia’s partners. As of today, the event may have affected Sequoia’s investing principles, at least in the near term. According to Sequoia’s managing partner, Doug Leone, Sequoia is “in a dream business” with entrepreneurs; however, “I can tell you that, for the next three to six months, we’re going to dream a little less,” he added.

What do you think about the future of venture capital? And will other funds follow in Sequoia’s footsteps to “dream a little less”?

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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

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