Sequoia injects $195 million into an ever-eager seed environment • TechCrunch

Sequoia Capital, a venture capital firm, today announced that it has launched a $195 million private equity fund, its fifth. The vehicle will be used to support founders across the US and Europe. The capital will also be used to invest in future cohorts or its Arc program, an internal Sequoia initiative that invests between $500,000 and $1 million to growing founders worldwide and is currently accepting applications.

The funding comes as the world of pre-production and seed, already a growing part of the startup ecosystem, becomes more attractive to investors looking to avoid later-stage market turbulence. AngelList data released today tells part of the story, noting that average pre-seed valuations held steady in the quarter last year, while later-stage deals, such as Series Bs, fell by nearly a third.

Jess Lee, partner at Sequoia and co-founder of All Raise, said on Twitter Pratt said the company will be looking at all verticals for potential founders, but specifically named artificial intelligence and consumer social as two areas it is investing in.

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In a blog post announcing the seed fund, other partners similarly noted areas of interest. Alfred Lin pointed to augmented reality and virtual reality as “the next consumer platform to drive large-scale innovation.” Sean Maguire said that “hardware will always have my heart.” Roelof Botha, Sequoia’s recently appointed global head, kept it simple, writing in a post that he’s looking for founders to take advantage of a more streamlined market and lower costs through automation, artificial intelligence and even genetic sequencing.

In an email exchange this morning, Sequoia partner Stephanie Zhan said that “it’s never too early to partner with Sequoia. We want to meet founders right at the beginning of their thought process” and “play an active role early on: ideas, design Questions as food for thought, introducing them to potential customers, and dreaming together about their vision.”

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Jean noted that Sequoia has written early checks for a number of fledgling startups that once became major brands, including Airbnb (Sequoia initially invested about $600,000 in the company). Dropbox (about $950,000 plugged in early) and Nubank ($1 million).

Jean observed that Sequoia also partnered with private payments giant Stripe “when they didn’t have a single line of code.” It was the first investor in WhatsApp. and Palo Alto Networks and YouTube were incubated in its offices.

Sequoia, like many firms, has seen its portfolio shrink during the recession, which may affect how partners handle due diligence and sourcing next year. Just last week, Sequoia-backed GoMechanic cut 70 percent of its jobs, with its founder admitting in a LinkedIn post that the company “made a huge error in judgment as we pursued growth at all costs.”

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Other Sequoia companies with significant declines include Bounce, Ola and well, FTX. Indeed, Sequoia’s $200 million investment in FTX has drawn fair criticism of the company’s decision-making record.

Lin, who was interviewed by TechCrunch’s Connie Louisus at his StrictlyVC event last week, said the experience hasn’t dampened Sequoia’s interest in cryptocurrencies. Although he said only 10 percent of Sequoia’s crypto fund was deployed a year after its launch, he added that Sequoia is “long-term bullish” on cryptocurrencies.

Lane also told Loizos that “the not-so-fun years are the best time to invest because all the tourists are gone,” a sentiment echoed by Jean in his exchange with TC today.

Jean wrote: “The end of the floor market in recent years is positive. Constraints create creativity and discipline. “Many of today’s most transformative companies were founded during periods of uncertainty, and we believe that’s the case now.”



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