The Ledger
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Botha: Broadly investing in venture capital is 'return-free risk'
“So in my opinion, investing in venture is a return free risk.”
Botha: Only ~20 companies per decade reach real $1B+ exits
“If you look at every single decade, there are only about 20 companies that end up Getting exit values north of a billion dollars. Actual IPOs or M&As north of a billion. Not the paper write-ups. Only 20 companies.”
LPs wrongly assume a VC firm's single-hit success is repeatable
“You get a firm that has one success in their fund, And then they attract more capital because people think it's repeatable, and it's not.”
Fund managers will continue hiding behind the J-curve to excuse poor returns
“I think people will still hide behind the J curve effect. And they'll say, yeah, my fund is only at 1.5 X right now, but it's only four years in and you know, the winners are going to emerge. And so I think this hope springs eternal dynamic and such a long tim…”
Botha: Sequoia requires unanimous consensus among partners for investment decisions
“So when we make investment decisions at Sequoia, it's a consensus decision.”
Botha: Sequoia-backed companies account for over 30% of NASDAQ value
“The companies in which we were private investors when they were little companies today account for over 30% of the total value of the Nasdaq.”
Sequoia Capital Fund gained $6.7B by holding post-IPO stock
“Now, to give you a sense, since we launched this three and a half years ago, we've accumulated another 6.7 billion in gains by doing nothing except being patient.”
Success in one domain doesn't give VCs the right to compete elsewhere
“We have no MD PhDs on our team at Sequoia, and I think, you know, it's very dangerous when people think that your success in one domain just naturally makes you gives you the right to compete in other domains.”
Botha: Sequoia employs as many developers as investors
“We have about as many developers at Sequoia as we have investors and they're building products for us so that we are much more effective and productive than we might've been.”
Botha: Sequoia uses AI to summarize business plans and analyze competitors
“If we get business plan submissions, we have an AI system that'll summarize it for me, so I get a very quick read on the company, a quick summarization of the quality of the Team and a very quick analysis of the competitive dynamics and the other companies I s…”
Botha: Chinese startup creation fell from 51,000 in 2018 to 1,200 in 2023
“Some stat I got recently, in 2018, there were 51,000 companies started in China. In 2023, it was 1200.”
Botha: Sequoia is structured as a private partnership in perpetuity
“No, actually we've structured ourselves To be a private partnership in perpetuity to the extent possible under California law.”
Sequoia partners do not pay for equity or charge their successors
“We didn't have to pay to get the partnership from the previous generation and nor will we charge the next generation.”
Botha: Every investment mistake I've made stemmed from a failure of imagination
“When I've thought about my mistakes as an investor, by the way, every single time it comes down to a failure of imagination that I didn't think big enough, I didn't think about how this company could progress from where they were.”
Sam Altman and Jason Calacanis sourced Stripe and Uber for Sequoia
“You helped us with the investment in Uber. Sam Altman was in that group as well. He helped with an investment in a little company called Stripe.”
Botha: Sequoia's initial Scout program fund is 26x
“So at this point, that, that fund is a 26 X fund at this point.”
Botha: Sequoia's Venture 12 and 13 funds returned over 20x
“The highest multiple in history is I think Venture 12, which has Airbnb, Dropbox, Natera, AdMob, and a couple of other companies. And then Venture 13, which is the fund right after that, has Stripe and Square, now called Block, MongoDB, and a bunch of other co…”
Botha: VC industry currently invests $150B-$200B per year
“Venture industry as a whole invests right now between a 150 to two hundred billion dollars a year was the last numbers I saw.”
Sequoia's seed, venture, and growth funds haven't grown in 5-7 years
“Our seed venture and growth funds today are no bigger than they were five, six, seven years ago.”
Botha: Palo Alto, ServiceNow, HubSpot, and MongoDB scaled 10x post-IPO
“And by the way, even in more recent memory, if you look at the last ten-ish years, Palo Alto, ServiceNow, HubSpot, MongoDB, these companies have all been 10 Xers as public companies.”
Palo Alto Networks was incubated inside Sequoia's office by Jim Goetz
“Palo Alto Networks was incubated inside our office with one founder and my partner, Jim Gates.”