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Sequoia Launches $500 Million Fund To Invest In Crypto Tokens As Silicon Valley Throws Billions At Blockchain

Published 4 months ago
By Forbes

TOPLINE

Fresh off a record year for crypto funding deals, storied venture capital firm Sequoia Capital announced Thursday it has launched a crypto-focused fund with between $500 million and $600 million in capital, becoming the latest Silicon Valley giant to plow money into the burgeoning cryptocurrency space. 

KEY FACTS

The Sequoia Crypto Fund will primarily invest in cryptocurrencies traded on third-party exchanges, serving as a subfund of the firm’s flagship Sequoia Capital Fund, which has invested in cryptocurrency companies like derivatives exchange FTX Trading and custodial platform Fireblocks.

Though the Menlo Park, California-based firm didn’t disclose the tokens its new fund will purchase, it’s already bought about ten cryptocurrencies, including bitcoin, ether and two tokens launched by cryptocurrency startups in its portfolio, social media-focused Deso and storage network Filecoin.

Sequoia Partner Shaun Maguire told the Financial Times on Tuesday the fund would make token investments with a “20-year lens” and avoid trading in the absence of “exceptional circumstances.”

Sequoia did not say how big investments from the fund will be; its existing investments have ranged from $100,000 to as much as $300 million.

The new fund follows a record year for venture-capital investment in cryptocurrency startups, with firms pouring $30 billion into the industry last year, roughly seven times the volume one year prior, according to PitchBook.

KEY BACKGROUND

The explosion in value of cryptocurrencies during the pandemic has ushered in a wave of investments. Investment firm Paradigm in November unveiled a $2.5 billion fund that will invest in crypto startups, and token-based apps in particular, the largest fund yet raised in the space. Five months earlier, Silicon Valley giant Andreessen Horowitz, an investor in Coinbase and non-fungible-token marketplace OpenSea, announced it had raised $2 billion for its own cryptocurrency fund.

SURPRISING FACT

FTX Trading, the cryptocurrency exchange founded by 29-year-old billionaire Sam Bankman-Fried, raised $900 million from investors in July in the largest private round in the industry yet. 

BIG NUMBER

$2 trillion. That’s the total value of the world’s cryptocurrencies as of Thursday, according to price-tracking site CoinGecko, after a wave of institutional adoption and inflationary concerns ushered in new highs during the pandemic. That’s a staggering eight times their value two years ago, but about 33% lower than a record $3 trillion in November.

WHAT TO WATCH FOR

Regulation, which has rocked crypto prices in recent years alongside broader market concerns. “We expect regulation, but there’s a balance that we need to find between protecting consumers and maintaining innovation in a really important space,” Maguire told FT. “It reminds me of early internet regulation.” President Joe Biden is reportedly set to release an executive order that will task federal agencies with regulating cryptocurrencies as a matter of national security as soon as this month.

FURTHER READING

Sequoia earmarks $500mn for push into cryptocurrency markets(Financial Times)

By Jonathan Ponciano, Forbes Staff

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