American venture capital investor Alfred Lin, a partner of Sequoia Capital, stood behind the firm’s multimillion-dollar investment in the now bankrupt crypto exchange FTX.
Speaking at Bloomberg’s Tech Summit, Lin he said if first tasked with re-evaluating FTX, Sequoia likely would have made the same investment decision. “I looked at the work we were doing in 15 different ways. […] We would probably invest again,” Lin said.
Sequoia Capital has about $85 billion in assets under management, with investments in major technology companies and several crypto businesses.
The venture capital firm has invested a total of $213.5 million in FTX and FTX US through its two funds. Global Growth Fund III held a $150 million investment in FTX — or 3% of the fund’s capital — while the Capital Global Equities Fund invested $63.5 million in the two companies, representing less than 1% of its entire portfolio.
Sequoia She sent her partner a letter last November announcement marked both crypto exchange investments as outright losses following FTX’s shutdown. “We’re in the business of taking risks.” Some investments will surprise on the upside and some will surprise on the downside,” explained the letter.
Here is the note we sent to our LPs at GGFIII regarding FTX. pic.twitter.com/Cgp1Yxk1pz
— Sequoia Capital (@sequoia) November 10, 2022
Lin shared that vision again at a Bloomberg event, saying that Sequoia’s investment thesis relies on trusting founders and taking calculated risks, adding that sometimes investments fail. Despite FTX’s dramatic collapse and loss of funding, Lin said the venture capital firm is “still very excited about cryptocurrency concepts.”
In addition to the multimillion-dollar loss, FTX created other problems for the venture firm. Some users of the bankrupt exchange are now to sue the financiers who supported the platform, including Sequoia, Thoma Bravo and Paradigm. The lawsuit alleges that the firms were involved in a promotional marketing campaign in 2021 and claimed that their efforts gave FTX an “air of legitimacy.” All three companies were investors in a 900 million Series B round in July 2021, the largest raise in cryptocurrency history.
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