20-7-2023 (SILICON VALLEY) Sequoia Capital, a renowned venture capital firm, has undergone significant transformations over the past year, marked by market turmoil, internal changes, and the departure of at least five investors.
In a recent announcement, longtime partner Michael Moritz disclosed his departure from the venture firm to concentrate on Sequoia Heritage, a wealth management enterprise that he co-founded. Additionally, senior partner Mike Vernal, along with Michelle Fradin, a key investor behind FTX, and partners Kais Khimji and Daniel Chen, are also leaving the firm.
Michael Moritz, who has been a part of Sequoia since 1986, will transition into a more advisory role at Sequoia Heritage, an impressive fund that boasts over $15 billion in assets. His family foundation, Crankstart, holds a substantial portion of assets in Heritage.
While Moritz will continue to sit on the boards of various Sequoia-backed companies, including Stripe Inc., he will gradually phase out of those roles, according to a note sent to investors and seen by Bloomberg.
Roelof Botha, of Sequoia Capital, expressed deep gratitude for Moritz’s contributions, highlighting his instrumental investments in companies like Google and PayPal that have solidified Sequoia’s position as a leading technology investment group globally.
Despite Sequoia’s long-standing history of lucrative returns since its establishment in 1972, the firm has recently encountered challenges. A major setback came from its involvement in FTX, the now-collapsed cryptocurrency exchange, resulting in a loss of $214 million, mainly from its global growth fund. Although the loss represented only a fraction of the fund’s total cash, it significantly impacted the firm’s reputation.
Among the recent departures were two investors closely linked to the firm’s cryptocurrency ventures. Michelle Fradin, a relatively junior partner, played a pivotal role in the decision to invest in FTX. Daniel Chen, whose Twitter bio identifies him as a “crypto maxi,” was also part of the team leaving Sequoia.
Additionally, Kais Khimji, who joined in 2019 and focused on later-stage companies, and Mike Vernal, who joined the firm in 2016, will be parting ways with Sequoia. Vernal, however, will be taking some time off before determining his next move. Notably, his portfolio includes investments in Rippling and Notion Labs Inc., both of which Sequoia backed two years ago, and Verkada Inc., a camera company that faced security breaches and a controversial corporate culture.
Sequoia’s upheaval extended beyond personnel changes; in June, the firm made a significant split with its operations in China and India. This move was partly influenced by the escalating geopolitical tensions, leading Silicon Valley firms to distance themselves from China.
As part of the breakup, Sequoia Heritage was formed as an independent entity, and Michael Moritz has a prominent role as a founding limited partner and board member.
The total venture assets of Sequoia Capital, apart from its Sequoia Heritage and hedge fund businesses, currently amount to $55.58 billion, as indicated in the firm’s latest filing with the SEC. While this figure represents a slight increase from the March quarter, it reflects a considerable decline from the $85 billion reported in the March 2022 filing.
