Following the departure of its former global head in November, the legendary venture capital firm is now steered by two star investors, Alfred Lin and Pat Grady, who are aggressively pursuing deals in the AI sector.
In 2023, the three co-founders of AI chip startup Etched—Gavin Uberti, Robert Wachen, and Chris Zhu—were still Harvard students living in a dorm. Around that time, Uberti first met with a Sequoia Capital partner. The venture firm was one of the investors Etched approached for its seed round, as the chip company aimed to compete in the high-barrier semiconductor space. However, Sequoia did not invest at that time.
Recently, the Menlo Park, California-based venture firm had another opportunity to invest in Etched, this time participating in its Series C round. During the fundraising preparation and process, Sequoia launched a full-scale lobbying effort. Wachen flew with Sequoia co-head Pat Grady, former senior lead Doug Leone, and partner Sonya Huang to a meeting. Etched's founders also visited the private Los Angeles home of another Sequoia partner, Shaun Maguire. Subsequently, Alfred Lin led a delegation of partners to Etched's headquarters in San Jose, California, for an on-site inspection of the chip design.
Core Takeaways
Sequoia Capital's new leadership is aggressively pursuing AI projects; having missed early stakes in several leading AI companies, Sequoia is now willing to enter AI deals at higher valuations; a limited partner document shows that as of May, Sequoia Capital's flagship fund had an internal rate of return of 7.09% since April 2022.
"We knew this round would be very fast-paced, so almost all of Sequoia's partners came out," Uberti said. "Over a dozen partners gathered in one small conference room to discuss." Last month, Sequoia announced it was leading Etched's $300 million Series C round, giving the company a post-money valuation of $103 billion.
The aggressive pursuit of the Etched deal reflects a broad strategic shift within Sequoia. This legendary venture firm, with a history spanning over half a century, has invested in renowned companies like Atari, Oracle, Apple, Google, Stripe, and Airbnb. The new management has formed a consensus that the profit opportunities in artificial intelligence surpass any previous major wave of tech transformation Sequoia has experienced.
After Roelof Botha stepped down in November, Lin and Grady took over as Sequoia's co-leaders (internally called co-CEOs). Since their appointment, Sequoia has become much more aggressive in AI investing. Previously, Sequoia missed opportunities to invest early in OpenAI and also passed on investing in Anthropic when its valuation was far lower than current levels.
Now, Sequoia is willing to take on AI projects it once considered overvalued, deploying its top team of partners to win over founders. PitchBook, a venture capital data provider, noted in a report earlier this year that Sequoia is among the top venture firms that have significantly accelerated their pace of early-stage investments.
This shift in investment strategy is a stark contrast to the Botha era. Under Botha's leadership, the approach to the AI boom was more focused on valuations, a mindset rooted in the lessons of the dot-com bubble burst. Just weeks before leaving, Botha admitted on a podcast: "The current market atmosphere echoes the 1999 dot-com bubble, the 2008 crisis, and the overheated market of 2021."
The market environment is driving strategic changes. AI is reshaping the investment logic for startups. Within just a few years, the valuations of many AI startups have soared to tens or even hundreds of billions of dollars. Aggressive investors like Thrive Capital and Menlo Ventures have not hesitated to make heavy bets on AI projects, reaping substantial paper profits. The current debate in Silicon Valley centers on whether these paper valuations will eventually translate into real returns or confirm that old market rules still apply.
This situation has sounded the alarm for established firms like Sequoia: they must act proactively or risk being left behind. This article is based on interviews with over twenty Sequoia investors, portfolio company executives, and insiders. A competitor in the venture capital space commented that the core sentiment of the Sequoia team now is: "We need to reclaim the top spot in the industry." Sequoia declined to arrange interviews with Lin or Grady.
An insider familiar with Sequoia's investment approach said that although market valuations continue to rise, the firm's underlying investment framework hasn't changed. However, the strategy has been upgraded to mobilize all partner resources to ensure deals are completed.
Objectively, Sequoia's returns across several funds in recent years have been mixed, especially for funds raised at market peaks. Records from limited partner UTIMCO show: Sequoia's flagship fund, launched in late 2021, had an internal rate of return of 7.09% from the University of Texas investment system's contribution in April 2022 to this May. This fund holds stakes in both public companies and private startups, including Klarna, Dada Group, Block, Airbnb, Tesla, and Figma. The fund's performance over this period lagged behind the S&P 500 index. (The UTIMCO documents, obtained through public information requests, do not specify whether the IRR figures are net of Sequoia's management fees.)
UTIMCO also disclosed the performance of three other Sequoia funds: a venture fund established in early 2020 with an $800 million size performed best, with an IRR of 36.41% from its contribution date to this May. In contrast, a growth fund raised in 2020 with a size of nearly $1.7 billion, and a seed fund set up in 2021 with a $195 million size, both underperformed the S&P 500 index from their respective contribution dates. These funds represent only a portion of Sequoia's overall portfolio.
The most typical example of Sequoia's new investment posture occurred in February of this year: Sequoia invested in Anthropic at a post-money valuation of $380 billion. Three months later, Sequoia committed over $2 billion to co-lead Anthropic's competitive Series H round. The total round raised $65 billion, pushing the company's valuation to $965 billion, widely seen as Anthropic's last private fundraising before a potential IPO in the fall.
People familiar with the negotiations said the round was finalized in less than a month, with intense competition from multiple firms like Greenoaks Capital, which also drove up valuations. Lin had a key personal connection: years ago, Anthropic's CFO, Krishna Rao, worked at Airbnb, where he was responsible for global corporate development while Lin served on Airbnb's board. Ultimately, Sequoia, Greenoaks, Altimeter Capital, and Dragoneer Investment Group co-led this mega-round, with no investor getting a board seat.
Since the management change in November, Sequoia has announced roughly 20 AI-related investments. Besides Anthropic, these include a significant investment in Waymo, the Google-owned autonomous driving company (Sequoia co-led the round at a $1.26 trillion valuation), and participation in the $1.1 billion seed round for London-based AI lab Ineffable Intelligence, founded by former DeepMind researcher David Silver. According to PitchBook, this funding round valued the less-than-one-year-old startup at $51 billion, marking the largest seed round in European history.
Earlier this week, Sequoia also announced it was leading a $1 billion funding round for nuclear power startup Valar Atomics. The company plans to provide stable power for data centers with massive computing needs. Sequoia again used its full resources to push the deal forward. Valar founder and CEO Isaiah Taylor posted on social media platform X that in early July, partners Grady and Shaun Maguire traveled to the remote desert city of Orangeville, Utah, to witness the company's test reactor generate power for the first time.
Both Grady and Lin have been at Sequoia for over 15 years. They emphasize that their primary duty as leaders is to source high-quality deals. In a podcast last December, Grady said to Benchmark Capital partner Jack Altman: "Lin and I want to return Sequoia to the state it has been in for 53 years: we both try to minimize administrative tasks and spend the vast majority of our time on the front lines of investing."
When Botha formally took the helm of Sequoia's global operations in 2022, his investment philosophy carried the imprint of an earlier era of tech investing. Three people familiar with his thinking said he was consistently skeptical of the sky-high valuations for large language model companies like OpenAI and Anthropic. In 2024, Sequoia chose to pass on participating in two rounds of OpenAI share sales led by Thrive Capital, valuing the company at $86 billion and $157 billion respectively, partly because Sequoia had simultaneously invested in competitor Elon Musk's xAI. Sequoia did participate in the subsequent two massive rounds led by SoftBank, which pushed OpenAI's valuation to $300 billion and $852 billion.
During Botha's tenure, Sequoia made early-stage investments in several AI unicorns, including Safe Superintelligence, Clay, Harvey, and Sierra. However, as the two leading AI companies' revenue grew at a breathtaking pace, capturing the vast majority of the AI startup market, Sequoia's initially conservative strategy was increasingly seen as a missed opportunity.
Ilya Strebulaev, a professor of finance at Stanford Graduate School of Business and a leading researcher on the venture capital industry, commented: "The leading AI companies have grown faster than anyone could have imagined. Sequoia essentially missed out on the most core set of targets."
Strebulaev recently completed a study of returns from top venture firms over three decades. Across all cycles, Sequoia still ranks first, with its core support coming from major investments made before the AI wave: Dada Group, Snowflake, Airbnb, and SpaceX.
Lin has publicly stated that the criteria for judging the venture capital industry are rapidly evolving. Speaking at the private tech summit Upfront Summit in Los Angeles this February, he said: "The standard for a great investment return is constantly shifting. For example, in the early days, a $100 million return could get an investment onto Sequoia's internal top-tier list; now the threshold has risen to over $1 billion." "In a few years, the threshold will likely be in the tens of billions."
To outsiders, the sudden departure of Botha in November seemed unusual for Sequoia, a firm with a 54-year history and a handful of leaders. Sequoia only released a public letter from Botha, defining the change as a continuation of the firm's "generational transition" tradition, without disclosing further details. The fact that Lin is only a year younger than Botha also suggests it wasn't a true generational shift.
Internally, however, tensions had been building for years before Botha's departure. His formal appointment as global head in 2022 coincided with a deep market downturn caused by rising interest rates, which triggered multiple crises for Sequoia. The FTX collapse severely damaged the firm's reputation: its $200 million investment in the troubled cryptocurrency exchange was written down to zero.
Sequoia Capital's flagship fund, established in October 2021, was also a source of dissatisfaction for many limited partners, including university endowments and non-profits. The fund was designed to hold shares of portfolio companies after they went public, but the broader stock market crashed shortly after the fundraising was completed. Sequoia subsequently adjusted the fund's rules to allow LPs to redeem some capital early. Insiders said Sequoia is optimizing the fund's operating mechanism to increase flexibility.
Criticism of Botha's management style was also mounting. People who worked with him described him as having a top-down management style, conflicting with Sequoia's long-cherished culture of partner collaboration. Two others mentioned that Botha had strained relationships with several core limited partners. Colleagues also noted that Botha lacked a recent signature success story like Leone's, who led investments in Wiz and Nubank during his tenure.
Supporters of Botha offered a different perspective: his extensive operational and board experience—serving on the boards of Block, Unity, Natera, and MongoDB, and as former CFO of PayPal—helped Sequoia earn the trust of entrepreneurs. A former investor said Botha actively ceded board seats to younger partners, continuously helping the team win deals. By the key yardstick LPs use to judge venture firms—cash distributions—the period from 2017 to 2025, when Botha led US operations, produced the best cash return cycle in Sequoia's history.
A CEO of a Sequoia portfolio company, for whom Botha had long served as a board member, said that Sequoia's current strong team of investors was built by Botha. "He recruited and developed the strongest team in the venture capital field," the CEO said, requesting anonymity. Regarding the criticism of his management style, the executive said his communication with Botha was always smooth, calling him a "top-tier investor and excellent board member."
A major controversy near the end of Botha's tenure occurred in July of last year. Partner Shaun Maguire, who led the SpaceX investment, sparked a huge backlash with a post on X (subsequently deleted) that labeled a New York City mayoral candidate an "Islamist" and claimed his "culture has a habit of fabricating lies."
The conflict eventually came to a head. Last year, the three most senior partners—Lin, Grady, and Andrew Reed—met with Botha to discuss his future. Insiders said Sequoia initiated an internal, undisclosed succession process. Botha eventually agreed to step down, retaining his board seats at Block and Unity. An official announcement on November 4 stated that Botha would continue as a Sequoia advisor.
After leaving Sequoia, Botha has maintained a top-tier network in the tech world. In June, he was appointed to the board of SpaceX, where founder Elon Musk had worked with Botha during the PayPal era. Despite Sequoia being a major SpaceX investor, no current Sequoia partner sits on its board. Around the same time, Sequoia removed Botha's biography from its website. A month later, Botha posted on LinkedIn, formally announcing the completion of his transition from Sequoia.
The New Generation of Management: Strong Reputation in the Founder Community
Alfred Lin is highly regarded in Silicon Valley. He joined Sequoia in 2010 after co-founding and selling the online shoe retailer Zappos. Over his 16 years at the firm, he has grown into one of its most productive and influential investors, leading investments in Dada Group, Uber, and Citadel Securities, and serving on the board of Airbnb. According to Stanford professor Strebulaev's data, Dada Group is the single highest-return investment in Sequoia's entire history.
Founders describe Lin as incredibly hardworking, often responding to texts, emails, and calls at midnight or 4 a.m., and possessing a deep understanding of startup operations and finance. Tarek Mansour, founder of prediction market platform Kalshi—a major recent success for Sequoia, which invested in its Series A in 2021 and where Lin serves as a board member—said: "He's good at foreseeing potential risks, having seen enough cycles." As a board member, Lin even personally interviews job candidates; on major decisions, he consistently acts as a thinking partner, "debating any topic, he will actively take the opposing view to think critically—a classic Socratic style."
Keller Clifton, co-founder of drone delivery unicorn Zipline, commented: "Most investors are nice to your face but privately disparage founders. Lin is the opposite: he asks sharp questions in meetings but is unconditionally supportive of the team privately."
Grady joined Sequoia at age 24 after nearly three years at Boston-based Summit Partners. Now 43, he is ten years younger than Lin. Several investors familiar with him believe he is less seasoned than Lin. However, he has made significant returns from investments like Snowflake and has recently entered a series of hot AI startups, including drug discovery company Chai Discovery, legal software Harvey, and medical search engine OpenEvidence.
Venture capitalists who know Grady describe him as having a "do-whatever-it-takes-to-win" trait. Bill Clerico, founder of Confluent, said Grady habitually pushes his limits in all areas of life. He frequently challenges himself on the Dipsea Trail in Marin County, a 7-mile course with over 2,000 feet of elevation gain, only to run it again from the start.
Despite his tenacious personality, Christopher O'Donnell, founder of native AI customer management platform Day AI, described Grady as calm and reserved. When they first met, O'Donnell was HubSpot's chief product officer, and Grady was on HubSpot's board. Based on reputation, O'Donnell expected to meet an older, more senior person, but "found he was under 30, friendly, introverted, and physically fit."
After learning of Botha's departure, Harvey Nguyen, founder of healthcare startup Abby Care, sent a congratulatory message to board member Lin. Lin's reply was very brief: the nature of the work has never changed.
Lin and Grady have sent a clear signal that they will not get bogged down in internal administration. The two plan to continue working on the front lines of investing. Since officially taking over as co-leaders, Lin has led at least four publicly announced investments, including Ineffable Intelligence, financial AI platform Rowspace, and smart code review startup Firetiger.
The biggest question from outsiders is whether the two can maintain their intense investment pace while managing the overall pressure of Sequoia. Lin and Grady collectively serve on 21 company boards and continue to provide investment guidance to dozens of startups. They also must set firm strategy and manage relationships with limited partners.
Speaking on the tech podcast "Sourcery" in March, Lin admitted: "Everyone outside congratulates Pat and me for taking over; but internally, colleagues say, 'Our condolences, you two are now responsible for coordinating everyone.'"
Five founders of portfolio companies reported that, so far, Lin and Grady's communication responsiveness and level of dedication have not diminished. Kareem Amin, CEO of legal AI company Clay (where Lin serves as a board member), said: "His communication and responsiveness are even more efficient. We're making strategy intensively right now, so the frequency of our interaction has increased." Max Rhodes, founder of online marketplace Faire, recalled a scene: one Friday evening, at a Mexican restaurant near the Marina in San Francisco, Lin was working on his laptop while waiting for his wife. "He never stops working."
The heavy workload might explain why Sequoia brought back Doug Leone as chairman in March. Grady posted on X on March 31: "Realizing Doug still has abundant energy, we invited him back to the front-line investment team."
An insider close to the firm offered a different interpretation, suggesting Leone's return was to help keep the two new leaders in check: "Why do you need three people to replace one person's job?" A source familiar with the matter refuted this, saying Grady and Lin actively invited Leone back to the investment business.
At the Allen & Company Sun Valley Conference in July, a Silicon Valley executive who met with Grady described him as more relaxed and joyful than in previous years, "fully engaged in work, completely dialed in."
Sequoia's annual closed-door summit, Base Camp, held in late June, showcased the new management's vision. The multi-day event included real-life laser tag and camping under the stars, and Lin had an informal, in-depth conversation over whiskey with Nvidia CEO Jensen Huang. (Nvidia's first external investment came from Sequoia.)
For over a decade, Base Camp has brought together top Silicon Valley founders and executives, with past speakers including Microsoft's Satya Nadella and JPMorgan's Jamie Dimon. The summit vividly demonstrates Sequoia's enduring industry influence. A San Francisco investor said it would be extremely difficult to challenge Sequoia's industry position. "To seriously hurt Sequoia, you'd probably need a decade of poor investment performance combined with a major scandal," a venture capitalist who previously worked at a university endowment's investment office commented. "No one wants to be known as the person who passed on investing in a Sequoia fund, only for that fund to produce a trillion-dollar company."
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