According to reports, the world’s largest venture capital firm Sequoia Capital reduced the size of its digital currency fund from $585 million to $200 million due to a liquidity crisis and a shift towards smaller crypto peers.
A Wall Street Journal article from July 27 claims that the tech-focused venture capital firm informed investors in March that it will cut the size of its ecosystem investment and Sequoia Crypto Fund in order to better reflect shifting market conditions.
Due to the recent instability in the bitcoin business, which eliminated many opportunities to support larger companies, the cryptocurrency fund will now concentrate more on funding early-stage startups.
As per the sources, another reason for the reductions is to make it easier for investors to participate in Sequoia’s fund offerings by lowering the capital requirement.
Sequoia apparently told the Financial Times that the modifications were made to “sharpen our attention on seed-stage possibilities and offer liquidity to our limited partners.” The company said that over the previous three years, it has given investors more than $15 billion back.
The company’s virtual currency fund was established in February 2022, with the market capitalization of cryptocurrencies down 39.1% from its peak of $3 trillion in November 2021.
One of the company’s biggest blows recently was its $214 million investment in the now-bankrupt FTX, which the company later wrote down to $0.
According to reports, Sequoia has decided to reduce its cryptocurrency investments, which is in line with a larger trend among venture capital firms.
In June, venture capital investments decreased by 29.7%, with $779.32 million raised through 62 different agreements, according to data
When compared to June 2022, venture capital inflows decreased by 77.7% in June 2023. However, not all venture capital firms are cutting their digital currency investments.
In the past month, Polychain Capital and Coinfund each raised $200 million and $152 million for their respective investment and seed funds.
