Sequoia Cuts Crypto Fund By 65%

Sequoia Capital Eyes India Comeback With Investment In Vance

SUMMARY

The VC firm has cut down two of its venture funds, including the crypto fund, which went from $585 Mn to $200 Mn

Sequoia’s move also comes as part of its downsizing exercise amid the prolonged funding winter in the startup ecosystem

India’s crypto industry has also been facing similar challenges, with only three funding deals worth $30 Mn in the first half of 2023

Sequoia Capital has cut its crypto fund by more than 65% to about $200 Mn amid the ongoing funding winter. Per a report by The Wall Street Journal, the venture capital (VC) firm has cut down two of its venture funds, including the crypto fund, which went from $585 Mn to $200 Mn.

The move from the VC firm comes against the backdrop of several crypto exchanges and platforms collapsing amid an ongoing downturn in the crypto landscape alongside tightening regulations around the industry. Further, Sequoia is reportedly looking to invest in younger startups.

By paring back the fund sizes, Sequoia is lowering the amount of committed capital required from investors, the report noted. Per a company spokesperson, the changes were made to ‘sharpen’ Sequoia’s focus on seed stage opportunities and to provide liquidity to its limited partners (LPs).

“The crypto fund will primarily focus on new company formation, with the opportunity to supplement these investments from our seed, venture, growth and expansion funds as the companies mature,” the spokesperson added.

Sequoia cutting its crypto fund also comes as part of its downsizing exercise.

India’s crypto industry has also been facing similar challenges. The government’s strict regulations on crypto taxation, TDS on crypto transactions and the repeated calls for banning cryptocurrencies from prominent ministers and regulators have hit the segment hard.

According to Inc42 data, investors pumped in $513 Mn across 32 crypto and Web3 deals in 2021. The momentum of 2021 continued in the first half of 2022 as well, with crypto and Web3 startups raising over $773 Mn across 39 deals. The funding uptick also saw the likes of CoinDCX, CoinSwitch, 5ire and Polygon hitting unicorn status.

However, in the first half of 2023, only three funding deals happened in India’s crypto, blockchain and web3 ecosystem during the first half of 2023, with around $30 Mn raised across the deals. The funding shortfall has also resulted in multiple companies shutting down, including Pillow, Flint Money and WeTrade.

The global crypto ecosystem has also witnessed a sharp decline in the trading value of major cryptocurrencies. Bitcoin, Ethereum and others fell massively in value in the second half of 2022. For instance, the price of Bitcoin fell to $15,757 apiece in November 2022, now having recovered to $29,310 apiece, still a long way off from its peak of over $67,000 in late 2021.