Sequoia unveils $950M in new early-stage funds because it strives to be ‘solely nearly as good as our subsequent funding’

Regardless of the rising chatter of an AI bubble, Sequoia Capital insists its funding method is unswayed by the market frenzy.

“Markets go up and down, however our technique stays constant. We’re all the time on the lookout for outlier founders with concepts to construct generational companies,” mentioned Bogomil Balkansky, a accomplice on Sequoia’s early-stage funding staff.

To show this consistency, Sequoia introduced two new funds on Monday that almost match the sizes launched about three years in the past: a $750 million early-stage fund focusing on Sequence A startups and a $200 million seed fund.

These funds are launched after what has been a tumultuous interval for the legendary agency. In 2021, Sequoia overhauled its construction into an evergreen primary fund supported by strategy-specific “sub-funds,” primarily to allow the agency to retain inventory in portfolio firms lengthy after their IPO. The agency took a major monetary hit in late 2022, shedding over $200 million when its funding in cryptocurrency change FTX blew up, adopted by the 2023 separation from its India and China divisions.

The storied agency, which famously backed Airbnb, Google, Nvidia, and Stripe of their infancy, is placing latest challenges behind it and returning to its core objective: investing in promising founders on the earliest levels of creation.

Balkansky strengthened this mission: “Our ambition has all the time been and continues to be to establish these founders as early as attainable; to roll up our sleeves and be a really energetic participant of their company-building journey.”

With AI startup valuations skyrocketing, Sequoia needs to make use of the brand new funds to put money into essentially the most promising founders in the beginning of their startup-building journey. This technique permits the agency to safe a low worth whereas locking in a major possession stake.

This early-stage focus is much more essential for the agency now. As valuations soar at an unprecedented tempo, getting in early is the important thing to locking in a lower cost and securing a considerable stake.

This method is paying off: Sequoia’s seed and Sequence A investments in Clay, Harvey, n8n, Sierra, and Temporal have appreciated manyfold amid the AI growth.

Even with its famend Sequence A historical past, Balkansky made it clear that Sequoia goals to defend its legacy by investing even earlier: “We’ve an incredible observe document and custom to accomplice with firms on the very earliest stage, which right this moment will likely be categorized as a pre-seed.”

He highlighted the agency’s early conviction: Sequoia not too long ago wrote the primary examine into safety tester Xbow, AI reliability engineer Traversal, and DeepSeek different Reflection AI — all firms which have since raised important capital at a lot increased valuations. Among the many methods the agency has helped behind the scenes, it says it recruited a former Databricks CRO to Xbow’s board, linked Traversal with greater than 30 potential prospects, and organized a gathering between Reflection AI and Nvidia’s Jensen Huang, main on to a $500 million funding from the chipmaker.

Even with these latest successes, Sequoia is relentlessly centered on upholding its five-decade legacy as Silicon Valley’s prime investor. To make sure this mindset persists, the agency’s newly renovated workplace encompasses a wall the place each investor handwrote this reminder: “We’re solely nearly as good as our subsequent funding.”