- Sequoia Capital has cut down its crypto-focused venture fund by 66%.
- The venture capital firm informed investors in March of its plans citing market conditions.
- The company also revealed that it has returned more than $15 billion to investors over the past three years.
Sequoia Capital has reduced its crypto fund by 66% citing changing market conditions. According to a report by the Wall Street Journal, the venture capital firm informed investors of its decision in March.
The company’s digital assets-focused fund is now down to $200 million from $585 million, the rapport said. Sequoia also reduced its ecosystem fund, which focuses on smaller funds and individual investors by half from $900 million to $450 million.
Sequoia has been one of the most active venture capital firms in the web3 space. It began its crypto journey back in 2014 when it invested in String Labs, a crypto studio, incubator and investor based in Palo Alto, California.
Sequoia Capital has invested in some of the leading companies in the digital assets space including its participation in Fireblocks’ $500M Series E round announced in February last year.
More recently, Sequoia Capital joined a long list of US banking and investment institutions to launch EDX Markets, the first institutional-grade exchange platform, that will also offer spot trading for Bitcoin, Ethereum, Litecoin and Bitcoin Cash.
After announcing its decision to downsize its crypto fund, Sequoia said it will now focus on early-stage opportunities, especially seed-stage.
Although Sequoia’s decision reflects an industry-wide trend amid the declining funding for web3 startups, some projects have remained resilient. This has continued to attract web3 venture capital firms that see the bear market as an opportunity rather than a warning signal.
In one of our recent reports, we established that some leading blue-chip NFTs like Cryptopunks, Milady NFT, Pudgy Penguins and Captainz have remained competitively valued throughout the crypto winter, while others like the Bored Ape Yacht Club, Azuki, Meebits and Clone X experienced significant declines in their floor prices and market capitalisations.
Some of the better-valued blue-chip NFTs like Captainz launched recently, while most of those that experienced huge declines have been around for years.
This could explain why Sequoia is cutting down on crypto investments in the latter stages of the projects.
In the early stages when NFTs and tokenised experiences were first emerging, investors pounced on the hype and the promise, but now, the focus has switched to applicable use cases as they seek to create lasting utility for their communities.
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