[HN Gopher] Sequoia is splitting into three VC firms
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Sequoia is splitting into three VC firms
Author : LastNevadan
Score : 143 points
Date : 2023-06-06 11:45 UTC (11 hours ago)
(HTM) web link (www.forbes.com)
(TXT) w3m dump (www.forbes.com)
| ksec wrote:
| Ok, the most important question, which one of the three invested
| in Sam Bankman-Fried?
| balaji1 wrote:
| all of the above
| [deleted]
| Leary wrote:
| The American one
| slugiscool99 wrote:
| Think this will make it easier for them to invest in
| strategically important technologies (like AI) in adversarial
| countries (China) without getting pushback like they have been
| Dudester230602 wrote:
| AI founder playing Honor of Kings during VC calls? That could
| work.
| SkyMarshal wrote:
| TLDR: Main reason for the split is conflicts between portfolio
| companies in different regions (eg Stripe in the US, vs Airwallex
| in China, vs unnamed in India all going global and competing with
| each other), and increasing complexity of centralized back-office
| regulatory compliance operations across these different regions.
| hgsgm wrote:
| Why not merge the companies?
| paxys wrote:
| That isn't for investors to decide.
| SkyMarshal wrote:
| The already were one company.
| kalupa wrote:
| I suspect the commmenter meant to merge the fin-tech
| companies ... Although, I'm not sure how that would even
| work, given international technology competitiveness being
| intertwined with politics
| SkyMarshal wrote:
| Yeah, and the founders most likely wouldn't be interested
| in that. Merging systems, sharing power, reconciling
| differences in vision, diluting stake all impossibly
| complicate option.
| cj wrote:
| What I found interesting (in the CNBC article) was that the
| partners will no longer cross-invest in each other's funds.
|
| The 3 units were operating independently already, but there was
| cross-over in partners from 1 division investing in funds from
| a different division.
|
| After the split, the article explicitly said the partners will
| no longer invest their own money in the other entity funds.
|
| Feels like it's a move motivated by regulation/compliance.
| OrvalWintermute wrote:
| Sequoia Shanghai
|
| Sequoia Beijing
|
| Sequoia Hong Kong
|
| ;)
| dan-rocks wrote:
| If we follow International Olympic Committee standards, but
| reversed: Sequoia Western Taiwan
| say_it_as_it_is wrote:
| The partners aren't team players after all, eh?
| fakedang wrote:
| From what I know, the firms were more or less independent
| anyways. At least going by the experience of friends in
| SeqIndia.
| alephnerd wrote:
| Same with Sequoia China for the past few years as well.
| moneywoes wrote:
| Which fund will have the best performance the next 20 years?
|
| My guess south east Asia
| epolanski wrote:
| US as always for a variety of reasons, most importantly amount
| of capital, smaller bureaucracy and huge market.
|
| Imagine if something like, say, Cloudflare, started in LATAM or
| SEA instead of San Francisco.
| [deleted]
| spaceman_2020 wrote:
| Investors in most markets are way more conservative as well.
| No one will give FAANG 20+ PEs outside of the US.
| balaji1 wrote:
| why so?
|
| Hope it is real sustainable performance in SEA. My fear is that
| it will be easier to run the "venture backed grow at all costs"
| model in Asia.
|
| This sucks the oxygen out of the ecosystem, very anti-
| competitive, short-sighted and not great overall.
|
| The operators involved do not learn to be real, thoughtful and
| long-term oriented. I have friends who were out-spent by newer
| venture-backed plays, which aren't doing that well either.
|
| In short, the highs will be high, but the lows could be very
| bad too.
| pxue wrote:
| I'm sad that LATAM is still lagging in terms of VC investment.
| Brazil+Mexico consumers should rival SEA.
| el_nahual wrote:
| LatAm has two issues.
|
| The first is demographics (and "demographics is destiny").
| There is not an expected population boom the way you have in
| West Africa.
|
| There will be tons of growth (look at Mercado Libre, a 63
| billion dollar company), but that growth will come from
| people coming online and spending online, without the
| tailwinds of a _growing_ young population.
|
| The second issue with LatAm is that--for "startup" purposes--
| just two markets. Brazil and Mexico. Everything else doesn't
| really add up and requires lots of localization for very
| small markets. This is exacerbated in places like the
| Caribbean. So you end up having quite concentrated
| political/macro risk in two countries.
|
| There are VERY good reasons to invest in LatAm, but the best
| case scenario for LatAm is something like 2-3x South Korea,
| not China.
| teachrdan wrote:
| > just two markets. Brazil and Mexico
|
| Naively, I'd expect Argentina + Chile to be essentially one
| giant local market, as they are united by language,
| geographic proximity and relative wealth. Why isn't that
| the case?
| travisjungroth wrote:
| Governments. Two sets of laws, two currencies, etc. This
| applies to every LATAM country. It's just Brazil and
| Mexico are the biggest. It's also bad because the
| governments are relatively bureaucratic and/or corrupt.
| So there are 650 million people, but it's like the value
| is in a few dozen hard to open boxes.
| wslh wrote:
| Impossible. The EU is more legally united after war that
| we are being all neighbors in peace. The fragility of the
| legal system in LATAM is a nightmare. It can change from
| day to night and the law is arbitrary. There is never a
| precise right or wrong. Chile is the most organized
| country but now the one with more potential.
| el_nahual wrote:
| a) Vastly different currencies/policy exposure. Argentina
| is an economic dumpster fire while Chile (and/or Uruguay)
| is kind of the "Singapore of south America."
|
| b) Even together they are tiny. Chile is 25% the GDP of
| Mexico, with a much higher GDP per capita. ie, Mexico is
| both much larger _now_ and has much more headroom to
| grow.
| browningstreet wrote:
| I was involved in a VC/incubator situation in LATAM some
| years ago. The conundrum then was that local talent could
| build all the tech apps/platforms/companies they wanted, but
| the local market could never be turned into
| customers/consumers. I'm guessing things have evolved since,
| but all the LATAM companies I encountered were building for
| the world-not-LATAM in terms of market.
| anovikov wrote:
| Why not? Just not as gullible/influenced by
| advertisement/celebrity worship/branding/following the herd
| as Westerners? Or simply poor?
|
| I witnessed people trying to build consumer app in one East
| European country which was their home one. Eventually they
| quit saying that "it can't work, people here are not stupid
| enough". Same app worked fine in the U.S. market even as
| they have never been in the U.S., had no idea of the
| culture things, and even their English was so-so.
| dan-rocks wrote:
| 1. Vast amounts of all types of fraud 2. Terrible legal
| and regulatory environment 3. Political instability 4.
| Surreal cost burden at every junction of the productive
| process (cheapest car in Brazil for example is USD 15000,
| which is the same price as the cheapest car in the US) 5.
| Zero customer loyalty, people jump from service to
| service to obtain a 0.01% discount
| busterarm wrote:
| Dubious reasoning.
|
| VKontakte still has 80 million users a month.
| narag wrote:
| _Just not as gullible /influenced by
| advertisement/celebrity worship/branding/following the
| herd as Westerners?_
|
| They're definitely Westeners.
| busterarm wrote:
| There are still too many investors who remember the debt
| crisis in the 80s and Argentina's more recent crisis and
| subsequently treat LATAM like it has the plague. That and a
| history of various governments seizing assets for the state.
|
| It also doesn't help their situation any that LATAM is hot
| for crypto assets either.
| prottog wrote:
| It's a good example of why a stable government, strong
| property rights, and rule of law are necessary (but not
| sufficient) conditions for long-term wealth development.
| digging wrote:
| I don't really agree with this overall statement (broad
| as it is). Rule of law is vague, or it has a specific
| meaning I don't know of, but high levels of wealth
| building coincide with illegal activity and/or (just as
| bad for stability) laws written by corporations to excuse
| their own behavior. If we're comparing these nations to
| historically capitalist nations, we're comparing two
| runners in a race where one of them shot the other with a
| gun, so it's just not reasonable to say that these
| countries are inherently doing something wrong for
| prosperity.
| doxeddaily wrote:
| > Rule of law is vague
|
| Not really. It means functioning courts that are fair. It
| means you don't pay people off to get your way.
|
| > so it's just not reasonable to say that these countries
| are inherently doing something wrong for prosperity.
|
| Nowhere in Latin America has there ever been the kind of
| stability you would find in a place like the US, Canada,
| Britain etc.
| digging wrote:
| > Not really. It means functioning courts that are fair.
| It means you don't pay people off to get your way.
|
| Ok, well then we definitely don't have rule of law in the
| US.
| mrguyorama wrote:
| see
|
| >comparing two runners in a race where one of them shot
| the other with a gun
|
| The old world settled in north america, and plundered in
| south america.
| wslh wrote:
| Don't forget the corruption bar. In LATAM corruption has a
| very low bar that permeates almost everything. Also,
| businesses move very slow in countries such as Mexico and
| Brazil. Regarding specifically about Argentina, crypto is
| also successful because several crypto technologies and
| security were invented in Argentina. Even if you don't
| believe it. Argentina is a pioneer in many security
| technologies and is a top entrepreneurial country.
|
| In the context of this article indeed it does not matter
| because entrepreneurs incorporates companies in a different
| jurisdiction, so the investment ends up in companies
| founder by Latin americans.
|
| Look at Auth0 [1], Mercadolibre, etc.
|
| [1] https://www.crunchbase.com/organization/auth0
| moralestapia wrote:
| The issue with LATAM is corruption, intertwined with
| mediocrity. This won't ever change.
|
| There's talent, sure, but you could just hire it out and
| keep your business based in a sane jurisdiction.
| busterarm wrote:
| > The issue with LATAM is corruption, intertwined with
| mediocrity. This won't ever change.
|
| There's absolutely nothing mediocre about how Mexico has
| developed their economy in spite of the absolutely absurd
| geographical logistics problems that they're faced with.
|
| LATAM is filled with ingenuity. The talent pool is
| strong, but opportunities are few. -- because see
| previously mentioned issues in my first post.
| moralestapia wrote:
| >There's absolutely nothing mediocre about how Mexico has
| developed their economy
|
| LOL, what? Do you speak from experience? Because I do.
| Watch this [1], that's the mentality of the average
| individual who has enough interest into science and tech
| to attend an astronomy congress. You're looking at the
| top of the distribution, it's downwards from there.
|
| >in spite of the absolutely absurd geographical logistics
| problems that they're faced with
|
| Ok, you may be just trolling right now. Mexico has
| _amazing_ geographical and logistical advantages:
|
| * 3,000+ kms of border with the largest economy in the
| world, plenty of goods that go from/to the US, go through
| Mexico
|
| * Access to both the Atlantic and the Pacific oceans
|
| * 14th largest country by area, the vast majority of land
| is (or could be at least) productive
|
| * Great weather the whole year, fresh water and rain
|
| * Not hit by natural disasters as much as other places in
| the world
|
| What are you talking about?
|
| 1: https://www.youtube.com/watch?v=QAwiyS5aTcU
| busterarm wrote:
| I'm talking about the difficulty of distribution _within_
| the country. Where shipping from city A to city B might
| mean crossing multiple mountain ranges. These obstacles
| are also obstacles to maintaining a stable government.
|
| Historically Mexico's economy has been fairly isolated
| and government has been fairly unstable. This has an
| enormously negative economic impact.
|
| You're looking at things with privileged glasses and
| ignoring all of the difficulties overcome for Mexico to
| get where it is today.
| moralestapia wrote:
| >Where shipping from city A to city B might mean crossing
| multiple mountain ranges.
|
| Like in ... many other places in the world? Also, you're
| factually incorrect, major highways cross the country
| through fairly straight and smooth paths.
|
| >Historically Mexico's economy has been fairly isolated
|
| From whom? Like from ... the world? #8 most visited
| country in the world and #14 global economy might suggest
| otherwise.
|
| >and government has been fairly unstable
|
| That's not geographical in nature, you're moving the
| goalpost.
| JumpCrisscross wrote:
| > _Like in ... many other places in the world_
|
| Most places in the world aren't prime investment
| destinations.
|
| > _That 's not geographical in nature, you're moving the
| goalpost_
|
| Limited agricultural potential, no navigable rivers,
| expensive-to-traverse mountains and isolated coastal
| communities. This is a _very_ difficult tract to govern.
|
| Mexico has a singular, massive advantage: proximity to
| America. With her navigable rivers, littoral waters and
| massive plains-based agricultural sectors. That, and its
| oil and mineral production, keep the central government
| powerful enough to project influence sufficiently to
| maintain stability.
| moralestapia wrote:
| >proximity to America
|
| Mexico _is_ in America, grab a map.
| JumpCrisscross wrote:
| > _Mexico is in America, grab a map_
|
| Which makes the intended meaning obvious. ("America"
| refers to either or both continents of the Americas, as
| well as to the United States; grab a dictionary.)
| sofixa wrote:
| > * Not hit by natural disasters as much as other places
| in the world
|
| Except for the highly volatile sinking capital that has
| been hit by numerous serious earthquakes.
|
| And of course, you're missing the biggest problem -
| taking a look at a topograhic map of Mexico will show
| that the terrain is horrible for internal communications.
| That's a significant handicap Mexico has had to struggle
| since being a Spanish colony, and it hasn't helped in the
| various independence and revolutionary movements.
| moralestapia wrote:
| >That's a significant handicap Mexico has had to struggle
| since being a Spanish colony, and it hasn't helped in the
| various independence and revolutionary movements.
|
| Please let me LOL again at the arguments you people are
| making.
|
| I grew up in Mexico and being a Spanish colony 400 years
| ago, plus the independence and revolutionary movements
| you mention have had _absolutely zero_ impact on my
| everyday life in the 21st century.
|
| Excuses have an expiration date.
| digging wrote:
| > I grew up in Mexico and being a Spanish colony 400
| years ago, plus the independence and revolutionary
| movements you mention have had absolutely zero impact on
| my everyday life in the 21st century.
|
| That makes no sense to say. Did I miss a year when Mexico
| hit the reset button and became a smooth blank slate? Or
| does in fact this country have history?
|
| Besides that, you're one person giving a tiny slice of
| your own personal experience. Interesting to talk about,
| but useless in a discussion about the modern economy of
| Mexico and its historical roots.
| sofixa wrote:
| So the geography didn't matter in the slightest for the
| evolution of Mexican political, military and economic
| history? The federalism isn't due to the impossibility
| for a central government to exert any sort of real
| control?
|
| How long does it take by train to move goods from the
| main Pacific to the main Atlantic port (oh, btw how many
| big natural harbours are there in Mexico?)? How long from
| agricultural lands or where industry is located?
|
| To pretend like the geography of Mexico hasn't had any
| impact in it's political or economic development would be
| missing a decent part of the big picture.
| moralestapia wrote:
| >So the geography didn't matter in the slightest for the
| evolution of Mexican political, military and economic
| history?
|
| I never argued this so I won't bite.
|
| The geography of Mexico is, if anything, privileged
| compared to what you find in other parts of the world.
|
| The country does not freeze completely every six months,
| for starters.
|
| Logistically, it's pretty much in the center of a whole
| continent, hard to top that.
| mason55 wrote:
| > _The country does not freeze completely every six
| months, for starters._
|
| Neither does the Sahara desert. That doesn't seem like
| much of an argument for or against geography.
| moralestapia wrote:
| What a dumb non sequitur. _Neither does Mars, gotcha!_
|
| The point made was that Mexico is not subject to extreme
| weather, and you bring in an example of another case of
| extreme weather.
| mc32 wrote:
| I think you hit it on the head. Investors want
| predictability and stability. The history of expropriation
| or defaulting will not inspire investment. You can't have
| governments with a caudillow attitude and people who
| support that attitude.
|
| Maybe one option is for a regional system where there is
| more incentive to not renege on deals and agreements when
| things don't go their way. Also if it's regional there is
| less likelihood of claiming imperialism --but who knows,
| they have their own rivalries.
| digging wrote:
| The answer is equity and fair trade (in the general
| sense). Let's not pretend that Latin American countries
| had fair deals and paths to prosperity and they defaulted
| for fun. The history of economic instability in the
| region is the history of foreign violence and
| exploitation as much as it is about corruption and poor
| governance. I'd be interested in seeing what a poor
| nation could do if given the support to just develop its
| own economy.
| mc32 wrote:
| LatAm was not the only region which was exploited by
| Corps or the IMF, international banking, etc. Others
| overcame those problems.
|
| But I think right now one of their options is to create a
| regional market like an EU zone and invest in themselves
| and hopefully realize some of their potential. They can
| set tehir own rules and expectations as well as benefits
| and penalties.
|
| Just as there is naive art, there is naive economics
| where people believe in maligning capitalism and
| expropriation as solutions to their economic malaise.
| digging wrote:
| > Just as there is naive art, there is naive economics
|
| Not so. Naive art is merely a subset of all art.
| hgsgm wrote:
| Is LATAM hot for crypto, or just one guy in El Salvador?
| dan-rocks wrote:
| Everywhere. Argentina and Venezuela due to need, Brazil
| due to the criminal opportunities it offers. It's even a
| running joke in Brazil that every week they arrest a new
| crypto-pyramid ring leader and give it the name "Sheik of
| Bitcoin", "Pharaoh of Bitcoin", etc. the press is running
| out of royal titles to give out.
| busterarm wrote:
| In Columbia it's hugely popular for tax-avoidance - plus
| the state is planning to create its own digital currency.
| whymauri wrote:
| Colombia, parce.
| busterarm wrote:
| Lol, my bad. I do this all the time, due to proximity to
| an actual place named Columbia.
| busterarm wrote:
| Absolutely scorching hot. You only have to look at all of
| the crypto startup activity based in Miami to have your
| answer.
| Enginerrrd wrote:
| Honestly I remember jokes from my childhood 25 years ago
| about how Brazil in 10-20 years would be the next big
| emerging economy, and had been like that for at least 75
| years.
| dan-rocks wrote:
| I am from LATAM and I would treat the region the same way
| as you're pointing out - like it has the plague. There is
| so much regulatory and legal uncertainty, not to mention
| the sky-high costs at every junction, that it's nearly
| impossible to build profitable, high-quality companies in
| the same way it happens elsewhere. I give credit to Nubank
| for being an exception, but everything else has been such a
| massive bust.
| financypants wrote:
| Just an anecdote: we were invested in a social commerce type
| company in brazil. They were losing 30%+ of inventory to
| theft, and management seemed to not be able to keep a handle
| on it. There are very good reasons vc investment lags here.
| sequoia wrote:
| Off topic but I really wish headlines like this would refer to
| the firm as "Sequoia Capital." Reading this headline is a bit
| jarring for me.
| blueyes wrote:
| They got there before you...
| Frummy wrote:
| We the forum will consider this in the future in order to
| maintain our strong diplomatic alliance with the user in
| question.
| LeifCarrotson wrote:
| Surprise! Forbes says you're pivoting from programming to VC.
| It's too late to raise objections about the size of your
| investment portfolio, the article is already public.
|
| And then you're going to split your sole proprietorship into
| three units, good luck with that!
| lordsfaer wrote:
| Agreed, at least it wasn't "Sequoia splitting into three
| branches"
| rootsudo wrote:
| That's the internal email subject they used!
|
| But that is actually a fantastic missed opportunity.
| [deleted]
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