Sequoia Capital has reduced the size of two major venture funds, including its cryptocurrency fund, as part of the venture firm's shrinkage amid a massive venture downturn.
Sequoia Capital Cuts Cryptocurrency Fund
According to people familiar with the matter, Sequoia reduced the size of the cryptocurrency fund from $585 million to $200 million. It also reduced the size of the ecosystem fund, which invests in other venture funds, from $900 million to $450 million.
Sequoia announced to fund investors in March that it had decided to reduce funds to better reflect the changing market.
The cryptocurrency fund, for example, will focus more on supporting young startups after the industry collapse has eliminated opportunities to support larger companies.
By reducing fund sizes, Sequoia is reducing the amount of capital committed from investors, known as limited partners, who are already earning lower returns from venture funds and are preparing for further declines.
Sequoia announced two funds in February 2022 as part of an ambitious firm restructuring, after spending months boosting its crypto investments. The crypto crash has since wiped out the revenue of many blockchain startups.
Long regarded as the best venture firm in Silicon Valley, Sequoia is known to adapt its business to changes in the technology investment market and stay ahead of its competitors.
However, the firm suffered a series of setbacks under the new leadership, which put its brand under serious pressure for the first time in years.
The firm has suffered a high profile black mark for its $150 million investment in cryptocurrency exchange FTX, which crashed last year. Sequoia issued a rare apology from its investors for this investment.
*Not investment advice.
