Sequoia Capital has declared the current time-based model for investing obsolete and is changing its structure completely, reports an article in CNBC. The firm will establish a single fund, the Sequoia Fund, that will funnel capital raised from LPs down to smaller funds that invest by stage, abandoning its 10-year venture fund.
Those smaller funds will then pour back into the Sequoia Fund, allowing the firm to hold public stock for longer periods of time. Investors looking for liquidity can take money out, rather than having to wait for distributions. In order to have more flexibility to invest outside of venture restrictions, Sequoia will become a registered investment advisor, enabling them to put more money into IPOs and increase their investments in emerging sectors like cryptocurrency.
As more investors pour into the market, the traditional venture model has slowly been dying for the last 10 years. Throughout the turbulence of the pandemic, Sequoia has managed to stay on top; when the IPO market set records at the end of 2020, Sequoia was a major beneficiary, due in large part to the debuts of Airbnb, DoorDash, Unity, and Snowflake. And now, without the limits of the old venture framework, investors will be betting on Sequoia to reap in returns from across the broad tech spectrum.