Last October, Sequoia Capital announced intentions to deconstruct the traditional venture capital model by forming a single fund to handle all of its U.S. and European assets (including publicly-traded shares). Now it’s setting out its next steps, including a $600 million fund focused on liquid crypto investments—the latest hint of VC interest in crypto firms amid persistent regulatory uncertainty and market volatility. Sequoia’s decision to form a separate crypto fund is a departure from convention, given the 50-year-old business had never done so before, although it was widely predicted.
Sequoia now invests in a limited set of firms through the Sequoia Fund, an open-ended liquid portfolio of public holdings. Following that, the fund distributes capital to a succession of closed-end sub-funds. A corporate official also announced a $900 million to $950 million Ecosystem sub-fund, which allows portfolio company owners to invest in related companies, and a $3.2 billion to $3.5 billion Expansion sub-fund, which focuses on growth-stage enterprises. The Sequoia Crypto Fund will primarily invest in digital assets and liquid tokens.
Layer 1 protocols, layer two add-on systems, the data layer, decentralized finance (DeFi), centralized apps, payments, gambling, Web 3, non-fungible tokens (NFT), and consumer and corporate infrastructure are all areas where the fund is investing. Sequoia said the crypto fund would be one of three new sub-funds under the Sequoia Capital Fund umbrella when it announced it on Thursday. Rather than raising additional cash, the new funds will employ resources previously pledged by Sequoia’s current limited partners. Sequoia’s limited partners, which include university endowments and pension funds, have expressed approval for the revisions, with 95 percent of qualifying balances being rolled into the firm’s new structure. Those limited partners can now choose which funds they wish to invest their money in.