Simply over a 12 months 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 12 months 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 among Silicon Valley’s most prestigious VC companies, is scaling again its ambitions within the crypto area. After launching a devoted $585 million crypto fund final 12 months, 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 state of affairs mentioned this can be a results of the bear market, which has affected tasks throughout the trade and pulled down costs considerably during the last 12 months.
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 area. The crypto market, nonetheless, has seen most tasks take a giant hit over the previous couple of months and Sequoia wasn’t overlooked, because it has seen a significant a part of its funding take drastic losses.
The corporate was notably affected by the crash of FTX, because it had a $214 million funding within the failed crypto alternate. Moderately than spray and pray with a big fund, Sequoia is now tightening its focus.
Complete market cap at $1.14 trillion as VC investments decelerate | Supply: Crypto Total Market Cap on Tradingview.com
In response to 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 for the reason that announcement of its funds, it’s no shock that Sequoia has determined to cut back. Crypto tasks, specifically, haven’t achieved properly in latest occasions.
In response to a latest report by Lattice, a crypto enterprise fund, solely 5% of tasks created throughout the 2021 crypto increase have been capable of create Product-to-Market Match (PMF). Extra data printed by Cointelegraph additionally reveals that the amount of cash invested in cryptocurrency startups by means of enterprise capital fell by 29.73% within the month of June.
Whereas it reveals an absence of religion and displays the rising development amongst enterprise capital companies, the pullback doesn’t imply Sequoia is abandoning the area altogether. The enterprise capital agency started its crypto journey in 2014 and has a historical past of backing revolutionary applied sciences early on.
Featured picture from CryptoPotato, chart from Tradingview.com
