Sequoia reveals on filing how much money it has in its Sequoia Capital Fund (and yes, a lot) TechCrunch
Almost a year ago, the investment powerhouse was 50 years old Sequoia capital announced that it was reorganizing itself around a single, permanent structure: the Sequoia Capital Fund.
Now, thanks to a SEC form filed on Friday, we know what’s sitting in the fund: $13.6 billion.
The number represents two things: the value of shares that Sequoia has brought into the fixed fund from its legacy funds – these are shares in the now-public companies that Sequoia supported when it was founded. , including Airbnb, DoorDash, Unity, and Snowflake. Some of those shares are owned by Sequoia; some of them are owned by the company’s limited partners, who have agreed to let Sequoia continue to manage the shares on their behalf.
$13.6 billion also represents new capital commitments that will be received later on call down and invest in more traditional funds that sit underneath Sequoia’s fixed fund, like a seed fund $195 million was announced last month. The idea is that if all goes well, the money will be invested in startups that will eventually go public, and whose shares will be funneled into the Sequoia Capital Fund in a kind of long-term, profitable circle. morality.
Not every portfolio company stock is ultimately included in the fund. Instead, Sequoia said in a post last year, the perpetual fund is for “Our permanent selection“enterprises.
For example, when Sequoia’s portfolio company, Stripe, finally went public, instead of distributing shares of the paying company to its investors, Sequoia – assuming that it had a limited partner support – it is more likely to transfer shares of Stripe from the various vehicles it has used to support Stripe into its Sequoia Capital Fund with the expectation that those shares will continue continue to increase in value.
Sequoia’s strategy — which was rolled out in late fall 2021, even when announced last year — has received much criticism.
One of the company’s limited partners told this editor last month that his organization would rather manage its distributions but agreed to Sequoia’s long-term strategy to maintain relationship with the company. Meanwhile, industry watchers have noted that if Sequoia were to distribute shares of many of the highest-growth companies in 2021, instead of holding them when the market took a turn last spring, , then it will generate much greater profit for its limited partners.
The company insists it has no regrets. in one sit down Last month, Alfred Lin, a longtime Sequoia partner, said that even if Sequoia could rewind the clocks to the end of 2021, it wouldn’t do otherwise. “We are long-term investors,” he said, adding that “the only question we asked was whether [we] think these companies will be worth more than 10 years from now, not any short-term period of three months, one month or one year.”
The companies in which Sequoia has invested in the Sequoia Fund are “building long-term,” Lin said. . . and If you believe in the long term, one of the best advantages [in] holding is something called temporary arbitrage. You’re just judging people’s anxiety because they don’t like to see volatility.”
A Sequoia spokesperson declined to comment for this story, but according to a source close to the company, limited partners will be locked down until the end of the year. Indeed, perhaps to ensure stability in the first place, Sequoia banned withdrawals from the Sequoia Capital Fund for the first two years, though in the future, if investors want some liquidity from the Sequoia Fund Capital, they will have two opportunities each year to claim this through some combination of stock and cash.
Meanwhile, it’s unclear how much of that $13.6 billion is tied up in equities compared to the money that comes from new capital commitments, which are earmarked for several Sequoia sub-funds with individual backing. Investors. However, an even more interesting number will soon be revealed if history shows any indication.
Because Sequoia restructured as a registered investment advisor when creating the fixed fund, the company must now file an annual form called an ADV specifying investment style, assets managed and key staff.
This form was last filed on March 31 of last year and shows that, as of December 31, 21, Sequoia is under management of a staggering $85 billion. Since it must be filed annually, Sequoia will soon share the latest information on the assets under its management.