Five partners leave venture capital firm Sequoia Capital after the firm suffered reputational damage for its FTX investment and was caught in the crossfire of US-China geopolitical tensions.
Among the crypto VCs departing are Michelle Fradin and Daniel Chen, whose investments include FTX.
Sequoia Partners Leave After Mixed Bag of Successes
Most of the $214 million lost from the FTX investment came from Sequioa’s global growth fund.
Read here how the FTX empire crumbled.
In addition to Fradin and Chen, departing VCs include Michael Moritz, Kais Khimji, and Mike Vernal. Moritz will take on a more senior advisory role at Sequoia Heritage, a wealth fund he helped found in 2010.
In addition to chronicling early tech developments during his time at TIME magazine, Moritz was an early investor in Google, Yahoo, Stripe, and PayPal. Despite leaving the parent firm, Moritz will continue to sit on boards of companies he invested in.
Venture capitalists like Sequoia were criticized for not performing adequate due diligence on FTX’s financials before investing in the company that collapsed last year. However, its financial loss is a drop in the ocean compared with the $55 billion in assets disclosed in its most recent filing with the US Securities and Exchange Commission.
The company arguably suffered more reputational than fiscal damage through its association with FTX.
Geopolitical Tensions Fuel Asian Spin-Offs
Sequoia recently severed ties with operations in India and China amid their rising geopolitical tensions with the US. China and several other countries are in the process of fighting the dollar’s preference in global trade. The Chinese unit assumed the name Hongshan, while Sequoia India and the Southeast Asian business formed a third entity.
Controversially, Sequoia invested in ByteDance, the parent company of TikTok. The US government threatened to ban the social networking app. In addition, the Biden administration is considering a screening process for Chinese investments.
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