The media reports that the Silicon Valley venture capital company Sequoia Capital has decided to downsize two of its large funds.
According to the information available to journalists, the company made this decision against the background of a significant decline in activity in the startup market. In this case, the termination of the existence of funds is not implied. The company decided to reduce the financial volumes of these structural units. In a certain sense, this decision reflects changes in the degree of intensity of the process of investing in the technology sector.
The company has reduced the size of its cryptocurrency fund to $200 million. The initial amount of finance was $585 million. The size of the ecosystem fund has also been reduced, which is currently equal to $450 million, which is half the original figure. The relevant information was published by the media concerning sources who provided the data on condition of anonymity.
A representative of Sequoia Capital, in response to a request from journalists for comments on the downsizing of funds, did not say anything.
Insider information available to the media also states that the company, as part of its activities, focused attention on startups at an early stage of existence and abandoned the concept of priority interaction with large firms. For what reason this decision was made is unknown. It can be assumed that the company relies on developers of innovative technological products and solutions with the potential for successful scaling that need financial support. This strategy, if in this case, the firm follows it, is advantageous in that it provides the prospect of a stable position of Sequoia Capital in the ecosystem of advanced technologies.
The company created cryptocurrency and ecosystem funds in February last year. In this case, the firm found itself in a situation of unfortunate circumstances. The creation of funds in the context of the relationship with the state of affairs in the surrounding financial and technological space at the time of the relevant decision was appropriate, but very soon the external landscape changed. There has been a slowdown in the conclusion of deals in the field of startups. Venture capital firms have made extra efforts to attract money.
Sequoia Capital, having reduced the size of funds, also requires investors to invest less. The media reports that the company has suffered losses of billions of dollars in the form of securities confirming its ownership of state shares. This happened against the background of last year’s decline in the technology market. The company also faced the negative consequences of the collapse of the FTX cryptocurrency exchange, in which it invested $150 million.
As we have reported earlier, Sequoia Backs Off App Citizen.
