Despite the growing chatter of an AI bubble, Sequoia Capital insists its investment approach is unswayed by the market frenzy.
“Markets go up and down, but our strategy remains consistent. We’re always looking for outlier founders with ideas to build generational businesses,” said Bogomil Balkansky, a partner on Sequoia’s early-stage investment team.
To prove this consistency, Sequoia announced two new funds on Monday that nearly match the sizes launched about three years ago: a $750 million early-stage fund targeting Series A startups and a $200 million seed fund.
These funds were introduced after what has been a tumultuous period for the legendary firm. In 2021, Sequoia overhauled its structure into an evergreen main fund supported by strategy-specific “sub-funds,” primarily to enable the firm to retain stock in portfolio companies long after their IPO. The firm took a significant financial hit in late 2022, losing over $200 million when its investment in cryptocurrency exchange FTX blew up, followed by the 2023 separation from its India and China divisions.
The storied firm, which famously backed Airbnb, Google, Nvidia, and Stripe in their infancy, is putting recent challenges behind it and returning to its core purpose: investing in promising founders at the earliest stages of creation.
Balkansky reinforced this mission: “Our ambition has always been and continues to be to identify these founders as early as possible; to roll up our sleeves and be a very active participant in their company-building journey.”
With AI startup valuations skyrocketing, Sequoia wants to use the new funds to invest in the most promising founders at the beginning of their startup-building journey. This strategy allows the firm to secure a low price while locking in a significant ownership stake.
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This early-stage focus is even more crucial for the firm now. As valuations soar at an unprecedented pace, getting in early is the key to locking in a lower price and securing a substantial stake.
This approach is paying off: Sequoia’s seed and Series A investments in Clay, Harvey, n8n, Sierra, and Temporal have appreciated manyfold amid the AI boom.
Even with its renowned Series A history, Balkansky made it clear that Sequoia aims to defend its legacy by investing even earlier: “We have an amazing track record and tradition to partner with companies at the very earliest stage, which today will be classified as a pre-seed.”
He highlighted the firm’s early conviction: Sequoia recently wrote the first check into security tester Xbow, AI reliability engineer Traversal, and DeepSeek alternative Reflection AI — all companies that have since raised significant capital at much higher valuations. Among the ways the firm has helped behind the scenes, it says it recruited a former Databricks CRO to Xbow’s board, connected Traversal with more than 30 potential customers, and arranged a meeting between Reflection AI and Nvidia’s Jensen Huang, leading directly to a $500 million investment from the chipmaker.
Even with these recent successes, Sequoia is relentlessly focused on upholding its five-decade legacy as Silicon Valley’s top investor. To ensure this mindset persists, the firm’s newly renovated office features a wall where every investor handwrote this reminder: “We are only as good as our next investment.”
