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Sources: Sequoia To Consolidate Fund Strategy
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Just Sequoia Capital XIII, which will include all of the above (plus its traditional early-stage investments in U.S.-based technology companies). It’s a bit unclear right now how LPs will react, which may determine whether or not Sequoia follows through. On the one hand, a global fund means less commitment decisions and (perhaps) better geographic synergy opportunities for portfolio companies. On the other hand, many LPs use “bucket” strategies, which makes laser-focused funds more palatable than catch-all funds. Plus, breaking out the funds lets LPs stop committing to an undesirable team, without bailing on other parts of the Sequoia universe. As for Sequoia, there is both risk and reward here. The risk is that the different teams will eventually buck eachother. We’ve seen it repeatedly with geographically-split firms, particularly when a strong office gets tired of sharing carry with a weak one. Rewards, however, include back-end simplification and better front-end integration. Also should add that while holding its meeting in China makes thematic sense, it also seems a bit tone-deaf. Many of Sequoia’s investors are strapped for cash, and have been instructed to cut back on expenses. Given that Sequoia hasn’t (yet) offered to pay LP freight, this seems like more burden than necessary… Related Posts |
Sequoia Capital is holding its next annual LP meeting in China. The objective is to emphasize the Silicon Valley-based firm’s global reach, which peHUB has learned will include a planned consolidation of all its different funds into a single vehicle. That means you shouldn’t expect another fundraising drive for Sequoia Capital China. Or Sequoia Capital Israel. Or Sequoia Capital India. Or Sequoia Capital Growth. |
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October 8th, 2009 at 4:16 pm
[...] peHUB » Sources: Sequoia To Consolidate Fund Strategy [...]
October 9th, 2009 at 12:19 pm
Here’s a question for all you Sinophile investors…
Just how much money have you pulled out of China so far? Ever. Ever!
Have YET to find a VC who answers to the affirmative.
October 9th, 2009 at 12:40 pm
The reason I ask is that we’ve seen our VC investors send approximately $4B to China to fund new ventures in China. Those funds almost always buy minority stakes in companies, many of which they know little about before the investments are made. Investors are given little or no insight into their portfolio companies, with no access to independent auditing of results.
Worst of all is when one of these companies ‘wins’, the investor is often frustrated in their repeated efforts to repatriate their profits. Chinese companies are no longer eligible (by Chinese law!) to be taken public on the Nasdaq and even the currency is held back before it can be repatriated.
I have seen this model before. It’s called “Madoff Investments”.
October 9th, 2009 at 3:07 pm
YEEHAAWWW…buy american says Mark. Mark thinks the world is flat and the moon revolves around Detroit manufacturing…bang bang
October 10th, 2009 at 2:35 pm
We know how the LPs will react: they will shut up and pray to be in Sequoia XIII. This is why they financed the Sequoia China (at the theart of a scandal) team, and the Israel team (which has still to deliver any return)… They are just exploiting a franchise while it’s still time.
We will see how Sequoia will deal once Mike Moritz is gone, as well as the old guard. Maybe just like Bay Ventures and some others once shiny and now deliquescent firms?
October 12th, 2009 at 5:41 am
This is a dispiriting move, as it withholds from LPs the ability to allocate capital as THEY see fit, relying instead on Sequoia’s supposed ability to do a better job themselves. Raising multiple funds with different regional or stage strategies helps hold GP teams accountable, and LPs should always be able to make a decision on whether to invest in US/China/India/Israel early/growth strategies depending on their own criteria, whatever might be behind that. That is their prerogative.
To do otherwise smacks of the high handedness of some of the massive global buyout firms like Carlyle and Blackstone which Mortiz & Leone have spent so much time and effort deriding and criticising.
If VC is meant to be a meritocracy, then each team and strategy should be allowed to stand on their own feet, with LPs voting with their wallets.