Sequoia Capital is the Silicon Valley’s envy. It started with early bets. Cisco AppleAnd GoogleFor more wins, see Zoom SnowflakeAnd Airbnb

Now, the company is completely changing the fund structure. It declares that the time-based investing model has “become obsolete.”

Roelof Botha (a Sequoia partner) wrote that “our industry is still bound to a strict 10-year fund cycle pioneered during the 1970s.” blog postTuesday, “As chips shrinked and software flew the cloud, venture capital continued operating on the business equivalent to floppy disks.” 

Sequoia has decided to end its 10-year-old venture fund. Limited partners (outside investors) contribute money to the fund and expect to be paid over 10 years. Sequoia announced it is establishing a Sequoia Fund to raise capital from LPs. It will then channel that capital down through smaller funds which can invest according to stage.

The Sequoia will receive the proceeds from these funds. Sequoia does not have a time horizon so it can retain public companies for longer periods of time rather than distributing shares to LPs. Investors seeking liquidity may be able to pull cash out, rather than waiting for distributions.

Like Andreessen Horowitz two years agoSequoia has become a registered investment advisor, which gives it greater flexibility to invest without restrictions. It could be used to fund IPOs. “It also enables us increase our investments into emerging asset classes, such as cryptocurrencies and seed investment programs,” said Sequoia.

Over the past decade, traditional venture models have been slowly dying away as many investors across the globe from all walks and backgrounds have invested in the seemingly unending bull market. Solo VCsSome have raised capital, while others have tied themselves with online syndicates to make seed deals. Private equity firms, as well as sovereign wealth funds, have also been making IPO-sized checks.

Although venture returns across the board have increased in recent years, Sequoia is still at the top of the heap. warningPortfolio founders and CEOs during the initial pandemic should have known that there would be turbulence.

It was the IPO Market by the End of 2020 setting recordsSequoia also was an a major beneficiarySnowflake, Airbnb and its debuts have made it possible. DoorDashAnd Unity

Investors can now place money on Sequoia as the company to use their funds across the whole tech spectrum. Sequoia decides how much of its money is invested in early-stage startups, larger businesses, international deals, and secondaries.

Sequoia will not have to sell stock, or distribute shares to companies that don’t fit into the new venture model. Sequoia might still have a portion of a stock share if the company is successful and becomes publicly traded within 20 years.

Botha stated that “this new structure eliminates any artificial time horizons as to how long we are able partner with companies.”

Imagine if the Sequoia hadn’t sold its Google stake.

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