Sequoia to go more long-term

Sequoia Capital, one of Silicon Valley’s oldest and largest venture capital firms, has launched a bold restructuring to create a single overarching fund.

The Sequoia Fund will take in capital from investors and funnel it to Sequoia’s traditional venture funds, which invest in US and European start-ups. It will also hold Sequoia’s stakes in publicly listed companies, such as Airbnb. It will also charge a management fee of under 1 per cent, and potential performance fees, adding an extra layer of fees on top of its existing venture funds, a person briefed on the changes said.

Sequoia hopes that the ambitious plan will give it and its investors more flexibility. Its investors will not have to commit their money to a specific VC fund for several years while Sequoia will be able to hold on to its investments for longer than other VC funds, which typically aim to return money to investors within a decade. “Investments will no longer have ‘expiration dates’,” wrote Sequoia partner Roelof Botha in a blog post. “Our sole focus will be to grow value for our companies and limited partners over the long run.”

Sequoia also said it would file with the US Securities and Exchange Commission to become a registered investment adviser, allowing it to invest more money in cryptocurrencies, public stocks and private shares that it does not purchase directly from companies.

It seems we are headed toward a future where the larger, more successful players move closer to being full-service investment houses.  Here is the FT story.  What is the best way to think about which assets they are building upon as the scarce factors behind their successes?  And what are the limits to exploiting those scarce factors?  Which culture clashes need to be overcome for this to work?

This kind of number is not very reliable, but in broad terms it tells you something:

The median US venture capital fund rose by 88.1 per cent in the 12 months through June this year, according to estimates from the investment firm Cambridge Associates.

Here is a useful short Medium essay from Sequoia itself.