Sequoia Capital is a California-based venture capital firm headquartered in Menlo Park, California and founded in 1972 by Donald Valentine. It has an aggregated public market value of over $3.3 trillion, 1244 investments, 251 exits, and 22 investment funds with a total of 15.3 billion in raised capital (as of July 2019). Sequoia Capital has offices operating in the United States, Israel, China, and India.
The company aims to invest early in companies that it deems to be "dentmakers," with the intention to aid with growing them. It invests in seed funds and helps start-ups with the initial stages of growing a business, such as hiring engineers, product development, strategy, and introducing early customers.
It also partners with established companies that are looking for step-function growth. Sequoia Capital utilizes a scout program in which individuals are financially backed by the company and expected to invest in early-stage start-ups so Sequoia Capital can have an advantage when larger funding rounds occur. There are several hundred scouts working for the company, and the scouts have the benefit of keeping a portion of the profits from the companies in which they invest Sequoia Capital's finances.
Donald Valentine founded Sequoia Capital in 1972. The firm participated in Apple's initial public offering in 1980 and made early investments of other companies that would later provide great returns for the company, such as Oracle, Cisco, Yahoo, Google, and LinkedIn. Their investment success led them to a $1.4 trillion combined stock market value in 2014, which was equivalent to 22 percent of the NASDAQ at the time. In 2014, nine investment partners working with Sequoia Capital made it onto the 2014 Forbes Midas List, which recognizes the world's top 100 technology investors. This was more than any other venture capital firm in the world. The nine Sequoia Capital partners making the 2014 Midas List were James Goetz (#1), Doug Leone (#6), Michael Moritz (#13), Alfred Lin (#26), Roelof Botha (#29), Neil Nanpeng Shen (#33), Michael Goguen (#44), Bryan Schreier (#72), and Kui Zhou (#81).
Sequoia Capital is structured as a limited liability company, in which investors contribute money to a fund that the firm's general partners utilize to invest in business ventures. These partners have included university endowments, charitable foundations, and other large institutions. The firm invests in seed-stage, early-stage, and growth-stage investments in private technology companies. Sequoia has been recognized for the firm's track record in early investments, with 2019 seeing Sequoia having more new seed-stage investments than Series A deals. In the same year, Sequoia was identified as a top unicorn investor, with investments in one of five of all private companies valued at $1 billion or more.
In the United States, Sequoia-backed companies account for more than 20 percent of NASDAQ's total value. Industries in which the company invests include energy, finance, enterprise, healthcare, internet, technology, and mobile. Sequoia Capital also invests money on behalf of non-profits and schools, such as the Massachusetts Institute of Technology. The company has branches in various parts of the world, including China, India, and Israel. It has had three global growth funds, and the one in 2018 had a five-year investment horizon. The minimum investment to join a global growth fund is $250 million.
Sequoia Capital's branch in the United States makes investments primarily in software, internet, mobile, enterprise, information technology, and e-commerce. They have raised approximately 15.3 billion in funding held in twenty-two (as of July 2019) different funds since their founding in 1972.
The company branch in China was founded in September 2005, and its managing partner is Neil Shen. Sequoia Capital China has 31 different funds with $3 billion in total capital, 398 investments, and 51 exits (as of July 2019). The company invests in industries such as logistics, drones, biotechnology, autonomous driving, and bike-sharing. It also invests globally in eight countries outside of China. Sequoia Capital China has offices in Shanghai, Beijing, Hong Kong, and other cities throughout China.
Sequoia Capital India was founded in 2000, with a Southeast Asia branch following in 2012. Its managing director is Abheek Anand, who manages along with multiple other directors. This branch of the company focuses on technology, consumer, and healthcare start-ups. The branch has made 314 investments and 31 exits. It focuses on investments that are connected to internet users, as India has one of the highest number of users in the world, and that number is continuously growing.
This subsidiary of the company was founded by Haim Sadger in 1999. The Israel branch of Sequoia Capital has made 151 investments and 32 exits. The branch invests primarily in software and enterprise software with a focus on information technology infrastructure and network security.
Announced in October of 2021, Sequoia Capital debuted a shift in their strategy for their investment funds' structure and the timelines for those funds to return capital. This came as Sequoia Capital felt the venture capital industry had not changed since the 1970s, and they needed to adapt to the change with the industries they invested in. As part of the change, limited partners invest in The Sequoia Fund, an open-ended liquid portfolio composed of public positions in a selection of enduring investments. The fund is also meant to allocate capital to a series of closed-end sub funds for venture investments in companies, with Sequoia Capital committing that these investments would continue to come at any stage of a company.
This change affects the firm's US and Europe-focused funds, with India and China-centric funds not adopting the structure. Further, the change means the new funds will not be committed to ten-year return cycles, which Sequoia Capital, in their release on the change, led investors to liquidate holdings in public companies based on set timelines rather than on determinations of when an investment had fully matured. The new fund removes the imposed expiration dates and is intended to reduce the pressure on investors to exit opportunities prematurely. The change is also intended to create a feedback loop, in which returns from start-up investments can return to the central fund to be redeployed into future investments, to further investor incentives with founders.
As part of the announcement on Sequoia's restructured funds, the firm also announced they had become registered financial advisors (RIA), joining firms such as General Catalyst and Andreessen Horowitz, which also became RIAs contemporaneously to Sequoia's change. This gives the firm more flexibility when backing non-traditional assets outside of private markets, which can allow them to better adjust to market trends, such as backing public companies during periods of public debuts and investing in capitalization trends such as initial coin offerings.
Associated Investment Funds
Funding Rounds Participated In
Billionaire Michael Moritz: Investing, Sequoia and Leadership
May 22, 2018
Cobalt Robotics + Sequoia: Why now?
July 11, 2018
Conversation on Philanthropy with Bill Gates and Sir Michael Moritz
November 13, 2014
Don Valentine, Sequoia Capital: "Target Big Markets"
October 11, 2010
Finding the Next Silicon Valley with Doug Leone (Sequoia Capital) | Disrupt SF
September 6, 2018