- Sequoia Capital will be launching a dedicated fund that allows it to play a more active role in cryptocurrency networks, including validating transactions (through staking) and voting on governance matters.
- Sequoia Capital’s new fund will allow it to become a bigger participant in cryptocurrency projects it backs and over 20% of its investments in the U.S. and Europe last year went to the cryptocurrency sector.
One of Sand Hill Road’s marquee names, Sequoia Capital, plans to move deeper into cryptocurrency markets and has earmarked at least US$500 million for investments in digital assets.
While Sequoia Capital may be better known for its prescient bets on TikTok, Snowflake (-6.05%), InstaCart and Robinhood (-9.33%), as well as WhatsApp and LinkedIn, its latest fund won’t be betting on equity at all, but tokens instead.
As part of a wider business-wide restructuring, Sequoia Capital will be launching a dedicated fund that allows it to play a more active role in cryptocurrency networks, including validating transactions (through staking) and voting on governance matters.
The shift is a marked departure from traditional venture capital investing, which typically involves holding equity stakes and represents a growing recognition that in a web3 world, tokens themselves can have far more value than equity.
As more blockchains shift to a proof of stake system to secure and validate transactions, investors are coming to increasingly recognize that the tokens or cryptocurrencies themselves, which typically have both staking opportunities and protocol voting rights, give them far more access and control over the development of a network.
Minority shareholders typically aren’t able to influence day-to-day management decisions, but cryptocurrency token holders can, whether voting on shifts in the protocol’s fee structure or incentive mechanisms.
Sequoia Capital’s push shows how big tech investors are increasingly recognizing that cryptocurrency markets are able to provide explosive financial returns that have so far been the exclusive purview of specialist hedge funds and enthusiasts.
Last year, Tiger Global Management, one of the world’s largest tech investors, made its first token investment.
Sequoia Capital’s new fund will allow it to become a bigger participant in cryptocurrency projects it backs and over 20% of its investments in the U.S. and Europe last year went to the cryptocurrency sector.
Unlike traditional startups, most cryptocurrency projects do not have traditional boards of directors, instead distributing tokens that allow investors to vote on major decisions using their tokens.
Blockchain technology has enabled such voting to be done relatively smoothly and seamlessly.
