FTX left deep scars. Even the biggest funds in venture capital (VC) are being hit by the crypto winter, and the last few months on the market have left a lasting mark on minds and wallets alike. We’ve even seen recently that investments in crypto being closely correlated to the Bitcoin price, the latter had inevitably fallenalong with the king of the market to 2020 levels. Today, we learn that the American venture capital giant, Sequoia Capitalreduced its investments in the sector and modified its strategy.
Sequoia seriously cuts back on crypto…
A word about this Menlo Park-based startup investment behemoth, which has made a name for itself by putting marbles in some of the biggest digital companies in recent years. With a portfolio of Google, YouTube, Apple, Airbnb or Facebookwe can say that the Sequoia Capital have a nose for good deals. And just over a year ago, in February 2022, the company founded by Don Valentine launched its Sequoia Crypto Fund to gain exposure to the young, dynamic crypto market.
12 months later and 200 million lost in FTXthe flies had changed asses, and it was clearly time to review the strategy. The fund in question went from 585 million dollars allocated to the 200 million. Similarly, another portfolio intended to put money into other VCs has also been significantly reduced from 900 to 450 million. On the Wall Street Journalwho released theinformationThere is talk of redirecting these funds towards younger, seed-stage companies.
… like (almost) the entire venture capital sector
But when investors were alerted last spring, it was more a question of reduce exposure to the sector in crisis and maintain liquidity for future operations. Finally, Sequoia representatives are also talking about lowering the fund entry thresholds in order to democratize their financial products even further. However, between the lines, we understand that 214 million up in smoke in the lavish spending of the Bankman-Fried have left their mark, and the time has come for sobriety.
In fact, this trend can be observed in virtually all major VCs specializing in cryptoas can be seen in the graph above. Investments rose from 3.5 billion in June 2022 à 780 million last June, or 77.7% decrease over one year. Vertiginous. But in the midst of the chaos, some players are continuing to invest in spite of everything, such as Polychain Capital and Coinfund which raised respectively 200 and 152 million of dollars.
When it comes to analyzing this backtracking by Sequoiawe can think of it as a family-style wealth management and that to be fooled once is already too much for professionals like them. What’s more, by continuing to bet on startups in their early stages, they remain exposed to the ecosystem while waiting to see how the spring will unfold. But other VCs sless cautious and continue to invest with the same zeal, especially on the continent, which is attracting high hopes for crypto: Africa.
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