A partner of Sequoia Capital, Alfred Lin, expresses unwavering confidence in the firm’s decision to invest $213.5 million in the now-bankrupt crypto exchange FTX. Lin’s remarks, made during Bloomberg’s Tech Summit, shed light on Sequoia Capital’s investment philosophy and its continued enthusiasm for the crypto industry.
Sequoia Capital’s Investment in FTX
Sequoia Capital, a prominent American venture capital firm managing approximately $85 billion in assets, has made strategic investments in both technology giants and various crypto enterprises. In the case of FTX, Sequoia Capital invested a substantial $213.5 million through two of its funds.
1. The Global Growth Fund III’s Investment
Under the Global Growth Fund III, Sequoia Capital allocated $150 million to FTX, accounting for 3% of the fund’s capital. Despite FTX’s subsequent collapse, Lin affirms that if given the chance to evaluate the investment anew, Sequoia Capital would make the same decision.
2. The Capital Global Equities Fund’s Investment
Additionally, the Capital Global Equities Fund invested $63.5 million in both FTX and FTX US, constituting less than 1% of the fund’s overall portfolio. These investments demonstrate Sequoia Capital’s interest in the potential of crypto businesses.
Sequoia Capital’s Approach to Risk and Lin’s Statement at Bloomberg’s Tech Summit
Sequoia Capital operates with an understanding that not all investments yield the expected results. The firm acknowledges the inherent risks associated with its investment strategy while emphasizing its confidence in the founders and its willingness to take calculated risks.
During the Bloomberg Tech Summit, Alfred Lin reiterated Sequoia Capital’s investment thesis. He highlighted the importance of trust in founders and the acceptance of both successes and failures. Despite the significant loss incurred from FTX’s collapse, Lin conveyed Sequoia Capital’s enduring enthusiasm for the crypto industry.
Ongoing Legal Challenges
Apart from the financial setback, Sequoia Capital faces legal complications. This is because users of the now-bankrupt FTX exchange filed lawsuits against the firm and other financial backers, including Thoma Bravo and Paradigm.
Allegations suggest that these investors were involved in a promotional campaign in 2021, which added credibility to FTX. It is worth noting that all three firms participated in FTX’s record-breaking $900 million Series B funding round in July 2021. This further indicated their faith in the exchange.