As per the reports, Sequoia Capital, an American investment and venture capital firm, reduced the size of its cryptocurrency funds from $585 million to $200 million due to a liquidity shortage and an inclination towards smaller crypto competitors.
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Adjusting to Market Conditions
In accordance with a Wall Street Journal report from July 27, the tech-focused VC company informed investors in March that it will lower its Sequoia Crypto Fund, as well as its ecosystem fund in order to better reflect changing market conditions.
Sequoia to Focus on Early-Stage Startups
Considering the current crypto sector turbulence, which has wiped off many possibilities to invest in bigger businesses, the cryptocurrency fund is going to concentrate on better financing initial stages entrepreneurs.
According to the reports, the business also intends to lower the capital level and therefore make it easier for investors to participate in Sequoia’s fund offerings.
Sequoia told the Financial Times: “We made these changes to sharpen our focus on seed-stage opportunities and to provide liquidity to our limited partners.”
Sequoia had Heavy Investment in FTX
Recall that the cryptocurrency fund began in February 2022, when the cryptocurrency market cap was 39.1% lower than its previous records of $3 trillion in November 2021. Another strong hit to the company was its $214 million investment in the now-defunct FTX. However, Sequoia Capital wrote down its interest in the cryptocurrency trading platform FTX to zero when the business collapsed.
Leading Funding Round for Multiple Blockchain Firms
Sequoia Capital was an important contributor to the large venture capital investments obtained by the digital currency and fintech industry. The business was reported to impose its influence in the industry, most notably by leading the $450 million fundraising round for Polygon, a blockchain-based Layer 2 platform.
In February, the firm revealed a $500 million to $600 million investment in an additional fund to strengthen its efforts to participate in the digital currency ecosystem.
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