Storied venture capital firm Sequoia Capital is looking to raise $500 million to $600 million for its first sector-specific crypto fund. The fund is one of the first sub-funds launched after the firm’s major restructuring, announced in October.
Sequoia’s restructuring shifts the firm away from a traditional venture capital structure and timeline of returning the investments of limited partners (LP) within 10 years. Sequoia now funnels all investments through the Sequoia Fund, an open-ended liquid portfolio of public positions in a select group of companies. The fund then allocates capital to a series of closed-end sub funds.
Sequoia Crypto Fund is one of the first sub-funds. In an interview with CoinDesk, a company official also confirmed a $900 million to $950 million Ecosystem sub-fund that lets select founders of portfolio firms invest in other related companies, and a $3.2 billion to $3.5 billion Expansion sub-fund focused on growth-stage companies.
Crypto venture capital funds hit new highs last year as digital asset prices rallied. In November, Paradigm launched a $2.5 billion fund, topping a $2.2 billion fund raised last summer from Andreessen Horowitz to become the largest VC fund in crypto history.
Investing in the ‘full stack’
The Sequoia Crypto Fund will primarily focus on investing in liquid tokens and digital assets.
“While we’ve invested in both equity and tokens over the last five years, many have asked that we take a more active role in managing our tokens, including staking them, providing liquidity, participating in governance and trading through their platforms,” said Sequoia partners Michelle Bailhe, Shaun Maguire and Alfred Lin in the announcement post.
In an interview with CoinDesk, Bailhe said the fund is investing “full stack,” including in layer 1 protocols, layer 2 add-on systems, the data layer, decentralized finance (DeFi), centralized applications, payments, gaming, Web 3, non-fungible tokens (NFT), and consumer and enterprise infrastructure.
“I think the interesting thing about this moment in crypto is that some people are approaching each of those sectors with more token-driven models and some people are approaching it with equities,” said Bailhe. “We wanted to have a full stack product, from seed through liquid tokens, for the founders we work with across all of these sectors.”
Why a crypto-specific fund?
Despite the launch of a crypto-specific fund, Sequoia will continue to partner with crypto teams across the seed, venture, growth and expansion funds, which have combined commitments of over $7.5 billion.
Why, then, would Sequoia also launch a crypto-specific fund?
“Part of why Sequoia has never had a sector specific fund is that we think it’s a superpower for everyone to share information and sit really close to each other,” Shaun Maguire told CoinDesk.
“We wanted to have a balance where we can move really fast and really nimble with an expert level knowledge of crypto, but also [make sure] the learnings are being shared across all of Sequoia,” Maguire added.
Maguire noted that people at Sequoia “have been around crypto for a long time,” but the sector became more of a firm-wide effort in the past year.
“Last year, over 20% of the entire firm’s investments went into crypto in the U.S. and Europe,” Maguire noted.
