Sequoia Capital is launching a cryptocurrency-focused fund of as much as $600 million — the latest sign of venture capital enthusiasm for crypto start-ups, despite regulatory uncertainty and market volatility.
“We have a long-term view on crypto that it’s a megatrend over the next 20 years,” said Sequoia Partner Shaun Maguire. “It’s the future of money.”
Sequoia’s move to create a standalone crypto fund is a break from tradition — the 50-year-old firm has never before carved out a specific sector fund — but it was widely expected.
The change comes after a broader revamp of the firm’s structure, allowing it greater flexibility to hold positions in public companies and the ability to work around rules that cap venture investments in crypto at 20 per cent of a fund.
Sequoia, which has embraced the world of crypto, is hardly the only venture firm to do so. Global investors plowed more than $21 billion into the sector in 2021 — more than in every year over the past decade combined, research firm CB Insights reported.
In announcing the crypto fund on Thursday, Sequoia said it would be one of three new sub funds at the firm, under the broader umbrella of the Sequoia Capital Fund.
The new funds will use capital already committed by Sequoia’s existing limited partners, rather than new funding.
Sequoia said that its limited partners — a group that includes university endowments and pension funds — support the changes, electing to roll in 95 per cent of eligible balances into the firm’s new structure.
Those limited partners can now decide whether they want to allocate their money to one or more of the sub funds.
Sequoia Partner Michelle Bailhe said the sometimes wild price fluctuations in Bitcoin, Ethereum and other coins didn’t concern her or others at Sequoia because “we’re investing on a 30-year horizon. We’re not an arbitrage firm”.
Lower valuations for start-ups could be appealing for the firm, its partners said.
“If we’re in a bear market, we could invest [the crypto fund] in under a year,” Mr Maguire said.