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Simply over a 12 months after launching its crypto fund, enterprise capital agency Sequoia is now rolling again its investments and taking extra of a extra cautious method. The agency was making some critical waves when it launched its crypto fund final 12 months in February, signaling that crypto was prepared for mainstream VC backing. However now the corporate has reportedly downsized its cryptocurrency fund by 65% because the crypto winter rages on.
Sequoia Pulls Again On Its Crypto Funding
Sequoia Capital, considered one of Silicon Valley’s most prestigious VC corporations, is scaling again its ambitions within the crypto area. After launching a devoted $585 million crypto fund final 12 months, Sequoia not too long ago introduced they’re slashing it by 65% to $200 million.
The agency has additionally lowered its ecosystem fund by 50%. The fund, which invests in different smaller enterprise funds and solo traders, is now at $450 million, down from $900 million.
Insiders near the state of affairs mentioned it is a results of the bear market, which has affected initiatives throughout the trade and pulled down costs considerably over the past 12 months.
Why Is Sequoia Taking This Step Now?
Sequoia is understood for making investments in crypto corporations and had initially introduced its funds as half of a bigger restructuring effort to extend its investments within the crypto area. The crypto market, nevertheless, has seen most initiatives take an enormous hit over the previous few months and Sequoia wasn’t overlooked, because it has seen a serious a part of its funding take drastic losses.
The corporate was significantly affected by the crash of FTX, because it had a $214 million funding within the failed crypto alternate. Slightly than spray and pray with a big fund, Sequoia is now tightening its focus.
Complete market cap at $1.14 trillion as VC investments decelerate | Supply: Crypto Complete Market Cap on Tradingview.com
In accordance with the report, the corporate’s new funding plan is to pivot towards smaller crypto gamers. The smaller cryptocurrency fund will now focus extra on a choose group of startup corporations.
With the crypto market taking a serious downturn for the reason that announcement of its funds, it’s no shock that Sequoia has determined to reduce. Crypto initiatives, specifically, haven’t performed nicely in current occasions.
In accordance with a current report by Lattice, a crypto enterprise fund, solely 5% of initiatives created throughout the 2021 crypto growth have been in a position to create Product-to-Market Match (PMF). Extra knowledge printed by Cointelegraph additionally exhibits that the amount of cash invested in cryptocurrency startups by enterprise capital fell by 29.73% within the month of June.
Whereas it exhibits a scarcity of religion and displays the rising pattern amongst enterprise capital corporations, the pullback doesn’t imply Sequoia is abandoning the area altogether. The enterprise capital agency started its crypto journey in 2014 and has a historical past of backing modern applied sciences early on.
Featured picture from CryptoPotato, chart from Tradingview.com
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