Sequoia Capital, one of the most prominent VC firms in Silicon Valley, has recently raised $6B as part of their $8B funding target.
The target is four times bigger than Sequoia’s previous fund.
“The magnitude is different today because companies are different today,” said Neil Shen, founder of Sequoia Capital China. “To be the lead investor in a company you can no longer just invest $100m… If you want to build a company that is worth several billion. For that you need $400m or $500m.” It’s a sign that Sequoia, whom previously focused on early stage ventures, is pivoting to later-stage capital.
Rivalling Softbank?
Many see this as part of Sequoia Capital’s effort of raising its war chest to compete against Softbank’s Vision Fund of $100B, which has disrupted the entire VC landscape.
(Trivia: interestingly, Vision Fund’s total AUM is about the debt that HNA, China’s prolific asset buyer, has accumulated).
While Vision Fund’s sustainability and governance are still causing controversy (see the recent FT article), with Softbank raising more money than other VCs combined last year, a question for any investor would become: do I want to go with Softbank, or do I want to go against SoftBank?
A clear example of that was the recent funding spree of Grab, which SoftBank controls.
Although $8 billion is still much smaller than Vision Fund, it gives Sequoia sufficient firepower per deal basis on certain deals. The fact that the money came from a diverse group of new investors signified a rising appetite for good venture investments.
We will see probably more attempts to raise big funds and the role of capital playing more significant role in bringing ventures from growth stage to IPO.
Good news for Go-Jek?
Even since the Uber-Grab merger in SEA, the pressure on Go-Jek from investor side surely mounted. There must be behind the scene discussions trying to force Go-Jek to throw in the towel and accept Grab dominance.
Alas, this would be a result that the Go-Jek team detests. Ultimately, their progress in Indonesia and execution are much better than that of Grab’s.
Now with both Sequoia and KKR (through its $9.3 billion fund raised last year) having significant firepower, and both Tencent and Google throwing support behind it, Go-Jek’s viability is actually better than it seems.
If their investors are as audacious (or aggressive) as Softbank.
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