The assets of the Sequoia Crypto Fund, launched in February 2022, were cut by 66% — from $585 million to $200 million. People close to Sequoia Capital said the write-down reflected the need to reflect changes in market conditions, WSJ reports.
The latter implies a broad downturn in private tech companies and a shortage of liquidity among investors who provide capital to venture firms.
Sequoia Capital also halved its Ecosystem Fund, which backs small venture vehicles and angel investors — from $900 million to $450 million.
According to the publication’s sources, the Sequoia Crypto Fund will now devote more attention to supporting early-stage startups. The management team has taken into account recent industry shocks that have left many unable to back larger companies.
Another factor was the lowering of the barrier to participation for investors in Sequoia funds.
The firm launched the Sequoia Crypto Fund in February 2022, when the cryptocurrency market capitalization had fallen by 39.1% from ATH of $3 trillion in November 2021.
One of the most serious blows to the structure recently were its $214 million investments in bankruptcy proceedings for FTX, which the company fully wrote off.
According to Cointelegraph Research, venture-capital inflows in June 2023 fell by 77.7% year on year — from $3.5 billion to $780 million.
In July 2023, the crypto-focused firm Polychain Capital raised $200 million for its fourth venture fund.
In the same month, CoinFund received investments of $158 million to create a digital-asset-focused structure.
Earlier, Sequoia Capital led a funding round for the LayerZero omnichain protocol, for $120 million.