Sequoia Capital has reportedly slashed its crypto-focused investment fund by 66%. Citing unnamed sources familiar with the matter, The Wall Street Journal reported that the fund, once valued at $585 million, is now worth $200 million.
Sequoia reportedly informed investors in Q1 that it will downsize the crypto fund. After the collapse of well-established firms like FTX, the VC firm now plans to back young startups. A Sequoia representative told The Financial Times,
“We made these changes to sharpen our focus on seed-stage opportunities and to provide liquidity to our limited partners.”
The representative further added that Sequoia has returned more than $15 billion to its investors over the past three years. Along with the crypto fund, the firm has also reduced the size of its ecosystem fund, which invests in other venture funds. Specifically, the value has been lowered to $450 million from $900 million.
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Catering to the ‘Why’: Startup Crunch Instigated Fund Downsizing
Sequoia made the decision to reduce the funds to “better reflect the changed market.” The reduction also brings to light the “difficult cuts” that venture firms are making amid the startup industry’s rough conditions. Further explaining the ideology behind the fund downsizing, the Wall Street Journal reported,
“They are trying to undo the breakneck expansion and liberal spending that characterized a historic startup boom, which no longer makes sense as deal-making slows and funds struggle to raise more cash.”
Investments by VC firms into crypto companies have dropped by over 70% over the past 365 days. A recent report published by a crypto data provider RootData revealed that in June 2022, the digital asset space registered inflows worth $1.81 billion in 149 rounds. However, in June 2023, only 83 projects received funding worth $520 million, making it the lowest funded month till date.
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