Sequoia Capital Executive Highlights FTX Investment Due Diligence

Speaking on behalf of Sequoia Capital

Lin stated that thorough internal processes were used to do extensive due diligence on FTX.

Sequoia Capital has lowered management fees in its two most recent venture funds as it gets ready for a slower investment environment, according to partner Alfred Lin on Thursday.

The early 2022 launches of Sequoia's crypto and ecosystem funds were funded by limited partners. They can now base management fees on capital deployed as opposed to the traditional approach of capital under management. Investors were informed of the modifications to the fee structure in December.

How much money is Sequoia putting in?

The company revealed a 950 million USD ecosystem fund in addition to a 600 million USD crypto fund to invest in cryptocurrency companies and tokens. The purpose of this is to aid scouts and funds started by Sequoia alumni. 10% of the cryptocurrency fund, according to Lin, has already been spent.

With this choice, the largest venture investor in the world conceded in an unusual way after U.S. venture capital deals fell by 31% from their peak in 2021. The ramifications for Sequoia's portfolio company FTX and the rapid decrease in internet company valuations have tested the company's long-standing ties with Limited Partners.

Was FTX subject to the VC firm's due diligence?

The SEC reportedly enquired about a number of investors in FTX's due diligence processes.

Speaking at the ceremony on Thursday, Lin claimed that rigorous research and due diligence on FTX had been carried out through newly initiated internal procedures. Lin asserted that there were several instances where they were deceived.

From its third Global Growth Fund, Sequoia Capital decreased its investment in FTX by 150 million USD. Additionally, by 64 million USD from its crossover fund, resulting in a total investment of zero in FTX and FTX US.