Simply over a yr after launching its crypto fund, enterprise capital agency Sequoia is now rolling again its investments and taking extra of a extra cautious strategy. The agency was making some critical waves when it launched its crypto fund final yr in February, signaling that crypto was prepared for mainstream VC backing. However now the corporate has reportedly downsized its cryptocurrency fund by 65% because the crypto winter rages on.
Sequoia Pulls Again On Its Crypto Funding
Sequoia Capital, one in every of Silicon Valley’s most prestigious VC companies, is scaling again its ambitions within the crypto house. After launching a devoted $585 million crypto fund final yr, Sequoia lately introduced they’re slashing it by 65% to $200 million.
The agency has additionally lowered its ecosystem fund by 50%. The fund, which invests in different smaller enterprise funds and solo traders, is now at $450 million, down from $900 million.
Insiders near the scenario mentioned it is a results of the bear market, which has affected tasks throughout the trade and pulled down costs considerably over the past yr.
Why Is Sequoia Taking This Step Now?
Sequoia is thought for making investments in crypto corporations and had initially introduced its funds as half of a bigger restructuring effort to extend its investments within the crypto house. The crypto market, nonetheless, has seen most tasks take a giant hit over the previous few months and Sequoia wasn’t omitted, because it has seen a significant a part of its funding take drastic losses.
The corporate was significantly affected by the crash of FTX, because it had a $214 million funding within the failed crypto trade. Reasonably than spray and pray with a big fund, Sequoia is now tightening its focus.
Whole market cap at $1.14 trillion as VC investments decelerate | Supply: Crypto Whole Market Cap on Tradingview.com
Based on the report, the corporate’s new funding plan is to pivot towards smaller crypto gamers. The smaller cryptocurrency fund will now focus extra on a choose group of startup corporations.
With the crypto market taking a significant downturn because the announcement of its funds, it’s no shock that Sequoia has determined to reduce. Crypto tasks, particularly, haven’t accomplished nicely in current instances.
Based on a current report by Lattice, a crypto enterprise fund, solely 5% of tasks created in the course of the 2021 crypto increase have been capable of create Product-to-Market Match (PMF). Extra knowledge printed by Cointelegraph additionally reveals that the amount of cash invested in cryptocurrency startups via enterprise capital fell by 29.73% within the month of June.
Whereas it reveals an absence of religion and displays the rising pattern amongst enterprise capital companies, the pullback doesn’t imply Sequoia is abandoning the house altogether. The enterprise capital agency started its crypto journey in 2014 and has a historical past of backing modern applied sciences early on.
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