Sequoia’s Roelof Botha
Photo: Steve Jennings/Getty Images for TechCrunch

Sequoia is questioning the fundamentals of venture capital

Protocol Pipeline

Hello and welcome to Pipeline. Biz Carson will be back next week. Tomio Geron and I are bringing you the week in venture capital and startups. This week: the new evergreen model, a Twitter squabble over paternity leave, and the newest crypto unicorn.

Sequoia leaves things open

In an industry where little has changed in a half-century, Sequoia Capital announced a big structural overhaul. The firm is creating a new open-ended fund, the Sequoia Fund, which will hold positions in some of its companies that have gone public.

Sequoia will still have closed-end subfunds underneath the Sequoia Fund to focus on seed, venture, growth and so on. And the new fund structure only applies to its U.S. and Europe operations, Sequoia's Roelof Botha wrote in a post announcing the changes. It's not clear when or if it might apply to the firm's India and China branches.

It's a striking move from an industry leader. If Sequoia were happy to just cash checks, it might not have made the change. But the firm has prided itself on staying hypercompetitive in an industry being roiled by outsiders like SoftBank and Tiger Global.

  • Sequoia has long talked about holding shares of companies long after they go public. Botha is still a board member at Square, for example. The traditional VC fund structure, where funds typically have a 10-year lifespan, doesn't easily accommodate that.
  • Sequoia now holds $45 billion in public stock alone, on which it has $43 billion in gains.
  • The new structure allows Sequoia to capture more of the upside when a company goes public and rises in value afterwards.

Sequoia's not the first to go evergreen or invest in public companies. Sutter Hill Ventures has long been the exceptional open-ended fund among Bay Area investors. Maverick Ventures is another example. And corporate funds like GV are often evergreen.

  • Being evergreen means avoiding some of the strange behaviors VCs engage in as a fund nears its end date. "One of the things we tell entrepreneurs: the typical fund cycle is [VCs] trying to have companies exit so the VC can go do their next fundraise. Now they have eased some of that pressure," said Don Butler, managing director at Thomvest Ventures, which has an open-ended fund with one LP, Peter Thomson of Woodbridge.
  • Crosslink Ventures and others have crossover strategies to invest in public and private companies.
  • But Sequoia is Sequoia, and that means other firms may look very closely at its new structure.

Investing in liquid public stocks makes Sequoia into a different kind of investor. It's now placing bets on more than just its ability to help founders build companies.

  • Sequoia is registering as an investment advisor, something that firms such as Battery Ventures and Andreessen Horowitz have done. That registration also helps firms invest in cryptocurrencies, Botha noted.
  • In theory, Sequoia could also directly invest in public equities. Butler notes that Thomvest has done this when its research has found that the best company in a sector is already public. Botha didn't mention any plans to do that in his post about the fund.
  • In any case, managing a big portfolio of publicly traded investments will require different skills — and means going up against the wide world of public equity managers.

Will there be a stampede on Sand Hill Road to follow Sequoia? Some are skeptical, if only because having such a large portfolio of public company shares is a high-class problem to have.

  • "It's laughable to think that Sequoia just blew up the VC fund model," Ho Nam, co-founder and managing director of Altos Ventures, said on Twitter. "The vast majority of VC funds don't have tens of billions of profits tied up in public stocks (and they never have), so what Sequoia does here is not that relevant to the rest of the VC industry."
  • "If you're saying they're revolutionizing startup funding, then I think you're just looking at it the wrong way," said Jerry Neumann of Neu Venture Capital.

Still, Sequoia has everyone looking. Even if an evergreen master fund isn't the answer for every VC, investors should be closely examining their fund structures and asking if they still make sense. Everything else about the world of startup finance has come under question lately.

— Tomio Geron


You're over Meta? That's not cool. What's cool is being over being Meta. Box's Aaron Levie had the best tweet about Facebook's corporate name change: "If your startup is not building a holding company at this point, are you even really a company?"

We never figured out if salad is tech, but Sweetgreen filed to go public this week. And Axios' Dan Primack pointed out how its filings reveal the company repeatedly lied about its profitability and revenue.

Venture-backed retailers are also testing the markets. Warby Parker went public last month, Rent the Runway started trading Wednesday, and Allbirds is teed up for an IPO. But Rent the Runway's shares fell below the offering price of $23 and closed the week at $17.25, down 27.5%.


To fulfill the skyrocketing demand for superior digital experiences and to continue delivering new technology that improves our world, we need people to keep dreaming and inventing and exploring and experimenting. While much of this may come from the known tech giants, life-changing innovation can — and should — emerge from companies of all sizes across all industries and cultures.

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Inside track

Gil Elbaz is hiring an operating partner at TenOneTen Ventures.

Homebrew's Hunter Walk has advice on philanthropy for new tech millionaires. Among his insights: Don't worry about whether your donations "solve" big problems like climate change. Instead, think about them as votes in favor of the organizations you back.

Joe Lonsdale, the Palantir co-founder and managing partner at 8VC, raised a storm when he said dads who take six months of paternity leave are "losers" because they ought to be out working to provide for their families. Alexis Ohanian and Garry Tan took him to task, and Lonsdale sort of apologized for using the word "loser." But he mostly doubled down on his stance that men shouldn't take long leaves in subsequent tweets.

Need to know

A new crypto unicorn. Alchemy, which provides blockchain development tools and cloud computing resources for other crypto companies, is worth $3.5 billion after raising $250 million from Andreessen Horowitz Crypto, Lightspeed, Redpoint and others.

NEA changes tack. The WSJ reports that the firm is raising new funds worth $7 billion, and is splitting early- and late-stage investments for the first time.

Hinge Health is a telehealth unicorn. The digital musculoskeletal health clinic raised $400 million from Tiger and Coatue at a $6.2 billion valuation, and current investors including some early seed backers sold $200 million in shares in a secondary transaction.

On Protocol: Biz and her colleague Megan Rose Dickey have been working for months on the new Diversity Tracker, which analyzes the reports tech companies issue about the makeup of their workforces. Read why Biz thinks the reports matter more than ever.

This week in VC history: Ten years ago, flash sales were hot, and sales at Fab, which had switched from a gay dating site to a "gay Groupon," was booming. A16z invested in the company in late 2011. It shut down a few years later and is now a case study in the new book "Why Startups Fail."

Your weekend reading: Om Malik, partner emeritus at True Ventures, reminisced about how the iPod, which Apple introduced to the world 20 years ago this week, changed his life. Among other things, his editors' lukewarm reaction to the gadget helped prod him to start blogging. (What he doesn't mention is where his first-generation iPod is today. Owen, who bought it from him when Om upgraded to an iPod mini, still has it in his gadget drawer.)

Five questions for …

George Mathew, Insight Partners

George Mathew joined Insight as a managing director in February. He specializes in startups in AI, ML, data and analytics.

What was your first job, and what's a skill you still use from it?

My first job was a sales engineering role at Fort Point building ecommerce systems in the mid-'90s. That job was great because you had to be an effective computational systems thinker in how the entire stack was deployed for a scalable ecommerce infrastructure, which influences how I think to this day.

Pitch deck vs investment memo: What's your preference and why?

Investment memo! Pitch decks are great, but it's way more important to build understanding and conviction in a deal by doing the work versus reading a pitch deck.

What's an interest or obsession of yours that most people don't know about?

Cars! In particular, the electrification of classic cars. As we decarbonize the auto industry, many classic cars will no longer be drivable due to emission standards. The most interesting answer is to electrify them.

What's a problem that we shouldn't use AI to solve?

In general, the literal weaponization of AI-based models in the military for targeting and lethality are areas we should tread lightly. That said, there are some incredible use cases even within the military where AI models will save lives. For instance, route clearing for IEDs where computer vision can detect and identify where a roadside mine may be placed.

Aliens visit Earth and you can only show them one TV series. What would it be?

"Ted Lasso." It's a master class in leadership, a study in the unbreakable nature of the human spirit and a visceral reminder that kindness always matters.


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