American Venture capital firm Sequoia Capital, having headquartered in Menlo Park, California, announced on February 17 about the launch of a $500 million to $600 million fund focused on its first sector-specific crypto-asset investment, "liquid tokens and digital assets” which are traded on third-party exchanges.

On Thursday in the blog post published by Sequoia, which is considered one of the 20 top venture investors in blockchain and crypto, refer to this step as “A Block Step Forward,”. As per the firm the new liquid token fund “complements” the firm’s ongoing crypto investing. The announcement further discusses prior partnerships with crypto movers and shakers like FTX CEO Sam Bankman-Fried and Michael Shaulov the co-founder of Fireblocks. Sequoia Capital's flagship fund has invested in cryptocurrency companies including FTX Trading and Fireblocks.

Although the firm didn't specify the tokens its new fund will buy but it already bought a total of ten cryptocurrencies like bitcoin, ether, and two tokens launched by cryptocurrency startups in its portfolio, social media focused Deso and storage network Filecoin. Additionally, the venture capital firm mentioned blockchains like Ethereum, Solana, and "major" decentralized finance protocols.

After restructuring, announced in October Sequoia Crypto Fund is one of the first sub-funds launched. This restructuring led the firm to shift from a traditional venture capital structure and timeline of returning the investments of limited partners (LP) within 10 years. All investments are now done through the Sequoia Fund which is an open-ended liquid portfolio of public positions in a select group of companies. Capital is then allocated to a series of closed-end sub-funds.

Additionally, Sequoia highlights the firm's strategic commitment to crypto and reveals plans to continue partnering with crypto teams across the industry. Sequoia Capital India led Polygon's $450 million investment round in the first week of February 2022. Polychain, Binance, Huobi, Polygon, Orchid Labs, and String Labs are among the investments the California company has made. A company official also confirmed the establishment of a $900 million to $950 million Ecosystem sub-fund that allows portfolio company founders to invest in related companies, and a $3.2 billion to $3.5 billion Expansion sub-fund focused on growth-stage companies.

In 2021, venture capital investments into blockchain protocols, crypto assets, and up-and-coming blockchain startups increased exponentially. As per PitchBook reports that venture capital firms invested $30 billion into cryptocurrency startups last year, which is roughly seven times the amount invested the year before. Venture capital (VC) investments broke records at $621 billion. With $32.8 billion in venture capital investments last year, crypto token and blockchain technology businesses accounted for 5.28% of the total in 2021. 

Indrani bose

CBW - External Analyst

INDIA