• Sequoia Capital, an investment firm, has reduced its exposure to cryptocurrencies from $585 million to about $200 million.
• This decision was accompanied by a similar cut to the venture capital sector overall, with the so-called ecosystem fund being downsized from $900 million to $450 million.
• The move is seen as a reflection of current market conditions, in which low-interest loans have gutted through much of the tech industries’ wild spending.
Sequoia Reduces Crypto Fund
Sequoia Capital, an investment firm well known for its involvement with Silicon Valley’s venture capitalists and tech visionaries, has reduced its cryptocurrency fund from $585 million to about $200 million. This comes alongside an equally large cut to their venture capital sector overall; they have downsized their ecosystem fund from $900 million to $450 million.
Market Conditions Reflected In Decision
This move is seen as a reflection of current market conditions, in which low-interest loans have significantly impacted tech industries’ spending habits. Seeking to avoid losing out like SVB did, Sequoia has opted for a nurturing stance on startups instead.
Lower Expectations And Smaller Returns
The two reduced funds were initially announced back in February 2022 as part of a restructuring plan implemented by Sequoia Capital. This plan involved lowering expectations and reducing returns so as not be caught off guard in the future when market conditions changed again.
Attempt To Avoid SVB’s Fate
Sequoia’s decision follows suit with other large investors who have decided to reduce their exposure to cryptocurrencies due to unfavorable market conditions and uncertainty around the future of digital assets. By downsizing their crypto fund and ecosystem fund they are attempting to avoid suffering losses akin to what SVB experienced last year when it lost nearly half its value after making big bets on crypto projects such as Ethereum and Bitcoin Cash.
Nurturing Stance On Startups
Ultimately, Sequoia is taking a more conservative approach with regards to cryptocurrencies and other investments; they are cutting back on riskier ventures while focusing more on nurturing startups that may not be able offer immediate returns but could bear fruit over time if given enough support and resources.