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Sequoia rebuilds itself away from traditional VC models

Sequoia Capital, one of Silicon Valley’s oldest and largest venture capital firms, has launched a bold restructuring to create a single, comprehensive fund.

Sequoia Fund receives capital from investors and pour it into Sequoia’s traditional venture funds that invest in US and European start-ups. It also holds shares in Sequoia for listed companies such as Airbnb.

He also charged a management fee of less than 1% and a potential success fee, adding an additional fee to the existing venture fund, said the person who was briefed on the change.

Sequoia wants an ambitious plan to give it and its investors more flexibility. The investor does not have to invest in a particular VC fund for several years, but Sequoia invests longer than other VC funds, which usually aim to return the money to the investor within 10 years. You can continue.

“Investments have no’expiration date’,” said Roelof Botha, a Sequoia partner. Blog post.. “Our sole focus is to increase the value of our company and our limited liability company in the long run.”

Sequoia will also apply to the US Securities and Exchange Commission to become a registered investment adviser, allowing more funds to be invested in cryptocurrencies, public and private equities that are not purchased directly from companies. Stated.

The company met with investors this week to explain the changes and asked how much of their funds they would like to contribute to the new structure, one said. Sequoia manages $ 45 billion in public stock for partners and investors, which includes a return on investment of $ 43 billion, he said.

Sequoia Capital China and Sequoia India are not part of the restructuring. The company’s other franchises, including a $ 8 billion fund for large-scale private investment, fund-style fund managers, and public hedge funds, will continue to operate independently of the new fund.

Funds and other large institutions have made significant profits from venture investments over the past year, and public investors are motivated by tech companies and venture capitalists in the red to invest at a historic pace. increase.

The median venture capital fund in the United States increased by 88.1% in the 12 months to June this year, according to estimates by investment firm Cambridge Associates.

However, much of the revenue remains unrealized as companies remain private for long periods of time and venture capitalists hold public stock in the hope of further profits.

Sequoia has generated the highest returns in the venture capital industry, with Airbnb, food delivery company DoorDash, and business software company Snowflake recently entering the open market.

In recent years, many hedge funds and mutual fund managers have taken a deep dive into private investment, but fewer venture funds have made the opposite move.

Sequoia said the new fund will have a permanent structure similar to a hedge fund, and returns from venture investments will “flow back into the Sequoia fund in a continuous feedback loop.” Investors can withdraw money twice a year after the first two-year lockup period, one explained the change.

Sequoia rebuilds itself away from traditional VC models

Source link Sequoia rebuilds itself away from traditional VC models

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