Based on Wikipedia: Sequoia Capital

In November 2022, Sequoia Capital published a glowing tribute to Sam Bankman-Fried on their website. By the following year, they had quietly deleted it. The cryptocurrency exchange he founded, FTX, had collapsed in spectacular fashion, vaporizing roughly eight billion dollars of investor money and landing Bankman-Fried in prison for fraud. Sequoia's investment? Written down to zero—a two-hundred-fourteen-million-dollar mistake from one of the most celebrated investment firms in history.

This wasn't supposed to happen to Sequoia.

For five decades, the firm had built a reputation as Silicon Valley's most prescient investor, the one that spotted Apple when it was two guys in a garage, that backed Google before most people knew what a search engine was. The FTX debacle forced a question that venture capitalists rarely like to ask themselves: Is being right most of the time worth anything if being wrong once can destroy everything?

The Don Valentine Method

To understand how Sequoia became what it is, you have to understand Don Valentine, the chain-smoking former salesman who founded the firm in 1972. Valentine had an almost religious belief in a simple idea: invest in markets, not management. He famously dismissed the importance of founders, once saying that he looked for big markets first because "you can always find good people to lead a company, but you can't create a market where one doesn't exist."

This was heresy in the venture capital world. Most investors of that era prided themselves on picking talented entrepreneurs. Valentine thought that was backwards. Put a mediocre team in front of an enormous opportunity, and they'd probably figure it out. Put a brilliant team in front of a tiny market, and they'd fight over scraps.

His first major success came in 1978, when he invested in a young company called Apple Computer. The personal computer market barely existed yet. Most industry experts thought computers belonged in offices and universities, not in people's homes. Valentine saw something different: a market that could become enormous if someone made computers accessible to ordinary people.

The Apple investment established Sequoia's template. Get in early. Get in cheap. Then hold on.

What Venture Capital Actually Is

Before going further, it's worth explaining how the venture capital business actually works, because it's structured in ways that create specific incentives—some of them quite strange.

A venture capital firm doesn't invest its own money. Instead, it raises funds from outside investors called limited partners. These are typically large institutions: university endowments, pension funds, charitable foundations. Harvard's endowment, for instance, has been a limited partner in numerous venture funds.

The venture firm's partners—called general partners—then invest that money into startups. In exchange for managing the fund, the general partners typically take two percent of the total fund size as a management fee every year, plus twenty percent of any profits. This arrangement is called "two and twenty," and it's been the industry standard for decades.

Here's where the incentives get interesting. A venture fund usually has a ten-year life cycle. During the first few years, the partners invest the money. Then they wait for those investments to mature. Finally, they either sell their stakes or distribute stock to their limited partners when companies go public.

This creates pressure to return money within a specific timeframe. If a company takes fifteen years to become valuable, that's actually a problem—the fund might be legally obligated to distribute shares before the real gains materialize.

Sequoia tried to solve this problem in 2021 by creating something called the Sequoia Capital Fund, an open-ended structure that wouldn't force them to sell or distribute stock on a fixed schedule. Limited partners who wanted their money back could request it, but the firm wouldn't be forced to exit good investments just because a clock ran out. It was a significant break from how venture capital had worked for half a century.

The Global Expansion

For its first few decades, Sequoia focused almost exclusively on Silicon Valley. But as technology went global, so did the firm.

The expansion started cautiously in 1999 with a fund dedicated to Israeli startups. Israel had developed a remarkably dense startup ecosystem, partly because mandatory military service exposed young people to advanced technology and created tight networks of trust. The country produced more companies listed on NASDAQ than all of Europe combined.

Then came China.

In 2005, Sequoia established Sequoia Capital China under the leadership of Neil Shen, a former banker who had co-founded both Ctrip (China's largest online travel company) and Home Inns (one of its biggest budget hotel chains). Shen had a different investment philosophy than Valentine's. Where Valentine obsessed over markets, Shen focused intensely on people. He was known for making investment decisions based on gut feelings about founders, sometimes within minutes of meeting them.

It worked spectacularly. Under Shen's leadership, Sequoia became the largest investor in China's consumer internet sector. The firm backed ByteDance, the company behind TikTok, when it was just another Chinese startup with a short-video app. They invested in Meituan, the food delivery giant. They invested in Didi, China's answer to Uber.

Shen also pioneered a strategy that would become controversial: investing in multiple competitors within the same sector and then pushing them to merge. Sequoia was reportedly instrumental in combining Meituan with Dianping, and in engineering Uber's retreat from China through its merger with Didi. Critics called this market manipulation. Supporters called it efficient capital allocation. Either way, it made Sequoia extraordinarily powerful in Chinese tech.

India followed a similar pattern. Sequoia Capital India, established in 2006, became by 2019 the most active venture capital fund in the country. Southeast Asia came next.

By the early 2020s, Sequoia had transformed from a Silicon Valley firm that occasionally looked overseas into a genuinely global operation. It managed approximately fifty-six billion dollars across three continents.

The Breakup

Then came the geopolitical reckoning.

Running a decentralized global investment business had always been complicated. Different time zones. Different legal systems. Different business cultures. But for years, the complications were manageable because the underlying assumption—that global capital markets would keep integrating—seemed obviously correct.

By 2023, that assumption had shattered. The United States and China were locked in an escalating technology war. Export controls restricted American companies from selling advanced semiconductors to Chinese customers. Investment screening regimes threatened to limit American money flowing into Chinese technology. The U.S. House Committee on U.S.–China Competition even launched an investigation into Sequoia's Chinese investments.

In June 2023, Sequoia announced it would split into three separate entities.

The Chinese business, led by Neil Shen, would become HongShan—"sequoia" translated into Mandarin. The Indian and Southeast Asian operations would become Peak XV Partners. Only the U.S. and European business would retain the Sequoia name.

The three entities would no longer share investors or profits. Fifty years of building a global brand, dissolved in a press release.

The split was officially attributed to "complications running a decentralized global investment business in the middle of geopolitical tensions." Translation: the American political establishment had made it untenable for a U.S. firm to be simultaneously investing in American and Chinese technology companies.

The FTX Catastrophe

Around the same time Sequoia was navigating geopolitics, it was also dealing with the aftermath of its worst investment in decades.

FTX had seemed, to many sophisticated investors, like one of the safest bets in cryptocurrency. Sam Bankman-Fried presented himself as the adult in a room full of children—the MIT physics graduate who understood risk management, the effective altruist who wanted to make money so he could give it away. He wore shorts and t-shirts in meetings with regulators and senators, projecting an image of nerd authenticity.

Sequoia bought it completely. The firm invested at a valuation that implied FTX was worth thirty-two billion dollars. Partners raved about Bankman-Fried in interviews. The company profile Sequoia published on its website was practically a hagiography.

Then, in November 2022, it all collapsed. A competitor published financial documents showing that FTX was entangled with a trading firm Bankman-Fried controlled. Customers tried to withdraw their money. There wasn't enough. Within days, FTX filed for bankruptcy, Bankman-Fried was arrested, and investigators began unraveling what appeared to be one of the largest financial frauds in American history.

Sequoia's response was swift. They wrote down their entire investment to zero and scrubbed Bankman-Fried's profile from their website. In their letter to limited partners, they emphasized that FTX represented "a small amount of their investment portfolio."

This was technically true. Two hundred fourteen million dollars sounds enormous, but for a firm managing tens of billions, it's a rounding error. The real damage was reputational. Sequoia had built its brand on being smarter than everyone else, on seeing what others missed. How had they missed this?

One theory, advanced by technology commentator John Naughton, traces the FTX investment back to a much earlier failure. In 2005, Sequoia had the chance to invest in Facebook and passed. That company went on to become one of the most valuable in history. Naughton suggested that this miss created a "fear of missing out" that made Sequoia more susceptible to charismatic founders promising to build the next world-changing company.

It's impossible to know if this theory is correct. But it points to something real about the venture capital psychology. The math of the business is brutal: most investments fail, so the few that succeed must succeed spectacularly. This creates enormous pressure to find the next Apple, the next Google, the next company that will return the entire fund and then some. That pressure can make smart people do foolish things.

The Scout Program

Not all of Sequoia's innovations have been controversial. One of their most influential ideas was something called the scout program, launched in 2009.

The concept was simple: give founders and other well-connected individuals a small amount of capital to invest in early-stage startups. If those investments pan out, Sequoia gets deal flow it might never have seen otherwise. The scouts get to play venture capitalist without quitting their day jobs.

The program has invested in over a thousand companies through its scout network. More importantly, it established a model that virtually every major venture firm has since copied. Before Sequoia, the idea of outsourcing early-stage investment decisions to non-partners would have seemed insane. Now it's industry standard.

In 2019, Sequoia expanded the scout program to Europe. In 2021, they partnered with BLCK VC to train Black scouts, part of a broader industry effort to diversify venture capital after years of criticism about its overwhelming whiteness and maleness. In 2022, they launched Arc, a program that gives participants one million dollars to work directly with Sequoia partners in London and Silicon Valley.

Leadership Transitions

Don Valentine stepped back from active management in the 1990s, handing the firm to Doug Leone and Michael Moritz. It was an unusual partnership: Leone, a brash Italian immigrant who had worked his way up from nothing, and Moritz, a reserved Welsh journalist who had once written a book about Apple before joining the firm that invested in it.

They ran Sequoia together for over a decade. When Moritz stepped back in 2012, citing health reasons, Leone became the sole global managing partner. Jim Goetz then led the U.S. business until 2017, when Roelof Botha took over.

Botha, a South African who had been PayPal's chief financial officer during its early years, represented a new generation of Sequoia leadership—one that had actually operated companies before investing in them.

In November 2025, Botha himself transitioned out of the managing partner role, replaced by Alfred Lin and Pat Grady as joint leaders. The firm called them "stewards" rather than managing partners, invoking Valentine's original philosophy that partners were temporary custodians of an institution meant to outlast any individual.

Lin had been a longtime Sequoia partner, while Grady had led many of the firm's most successful recent investments. Their ascension represented a generational shift—but also continuity. Sequoia has always been remarkably stable for a firm in such a volatile industry. Partners tend to stay for decades. The culture, for better or worse, persists.

The Maguire Controversy

That culture faced an unexpected test in the summer of 2025.

Shaun Maguire, a Sequoia partner known for his outspoken presence on social media, made statements about Zohran Mamdani, a Muslim American running for mayor of New York City. Maguire claimed Mamdani "came from a culture that lies about everything" and was pursuing "his Islamist agenda."

The backlash was immediate. Over six hundred founders signed an open letter demanding Sequoia adopt "a zero-tolerance policy on hate speech and religious bigotry." Critics pointed out that venture capital firms depend on deal flow from founders of all backgrounds, and that tolerating Islamophobic statements could cost the firm access to an increasingly diverse entrepreneur population.

Senior partners declined to take action against Maguire, citing free speech concerns. In response, Sumaiya Balbale, Sequoia's chief operating officer, resigned. Balbale was openly Muslim and had spoken publicly about how her faith influenced her career. Her departure after five years with the company underscored the tensions between Silicon Valley's libertarian culture and its stated commitments to diversity.

The Defense Technology Pivot

In recent years, Sequoia has also become increasingly interested in defense technology, a sector that previous generations of Silicon Valley investors largely avoided.

In March 2025, the firm led a one-hundred-ninety-million-dollar investment round for Peregrine, a law enforcement technology startup. That same month, news emerged of Sequoia's involvement in Kela, an Israeli defense-tech company founded by former intelligence officers during the Gaza conflict.

When Sequoia then invested one hundred million pounds in Mubi, a film streaming service, some critics objected to Mubi taking money from a firm that had funded defense and surveillance technology. The controversy illustrated how venture capital investments, once considered purely financial transactions, have become political statements.

This politicization of venture capital is relatively new. For decades, the industry operated in relative obscurity. Institutional investors cared about returns, not public relations. Founders cared about getting funded, not about their investors' other portfolio companies. The general public had no idea who funded the apps on their phones.

That anonymity is gone. Social media means every investment decision can become a news story. Every partner's tweet can spark a boycott. Every portfolio company can become a liability. Sequoia is learning, along with the rest of Silicon Valley, that capital has consequences beyond returns.

What Sequoia Actually Is

So what is Sequoia, really?

One answer: it's a money management business. Limited partners give the firm capital; the firm invests that capital in startups; when those startups succeed, everyone makes money. By this measure, Sequoia is extraordinarily successful. The firm has invested in companies worth hundreds of billions of dollars collectively. Its track record of early bets on transformative companies—Apple, Google, Cisco, YouTube, Instagram, WhatsApp—is unmatched.

Another answer: it's a kingmaker. Sequoia's investments don't just provide capital; they provide legitimacy. Getting Sequoia money signals to other investors, to potential employees, to potential customers that a company is serious. This reputational power is self-reinforcing: because Sequoia has backed so many winners, getting Sequoia backing makes it easier to win.

A third answer: it's a bet on a particular theory of how the world works. That theory holds that technology companies can grow faster than almost anything else, that early identification of winners matters enormously, and that the best way to capture value is to get in before everyone else realizes what's happening. This theory has been correct often enough to make Sequoia's partners very wealthy. Whether it will continue to be correct is an open question.

The venture capital industry is facing challenges it hasn't seen before. Interest rates, after a decade near zero, have risen substantially, making the risky returns of venture capital less attractive relative to safer investments. Geopolitical fragmentation is limiting the global investment opportunities that firms like Sequoia built their empires on. Artificial intelligence threatens to automate many of the businesses that venture capital traditionally funded.

And yet. Sequoia has survived for more than fifty years. It has navigated the dot-com crash, the financial crisis, and the pandemic. It has reinvented itself multiple times—from Valentine's market-first philosophy to Shen's founder-focused approach to the scout program to the open-ended fund structure. The FTX disaster was humiliating, but it wasn't fatal.

Perhaps that resilience is the real story. Not the wins or the losses, but the ability to keep playing. In venture capital, as in the startups it funds, survival is the prerequisite for everything else.