Classic VCs collectively change their approach: Even Sequoia is going all in on Crypto

On Wednesday US time, Sequoia Capital, one of the world's largest, oldest and most successful venture capital funds, quietly changed its Twitter profile.

Opening Sequoia’s Twitter homepage, the header is still “We help the daring build the legendary companies”, but the introduction below has changed, with some words that may be difficult for ordinary people to understand, such as DAO, Buidl, and LFG. People who don’t understand are confused, thinking that there is a problem with Sequoia’s backend system, while people who understand talk about it. In addition, a screenshot of a WeChat chat was also circulated on the Internet today, and Shen Nanpeng, the head of Sequoia China, said that he would “all in Crypto”.

Although Sequoia has not made a clear statement yet, many people have interpreted this change by Sequoia as a test of its comprehensive strategic transformation to Web 3 and brand reconstruction in the new era.

Image from Sequoia Capital's official Twitter account

So, what secrets are hidden in Sequoia’s latest Twitter profile?

Sending a signal of full embrace of Web 3

Image from Sequoia Capital's official LinkedIn account

Sequoia Capital’s Twitter profile was changed today to “Mainnet faucet. We help the daring buidl legendary DAOs from idea to token airdrops. LFG.”

Based on the limited vocabulary of the cryptocurrency community, Silicon Stars found at least 6 special words related to cryptocurrency in this short sentence. Below, we will introduce them one by one.

First of all, Mainnet refers to the blockchain network used by the vast majority of people, where users trade, build smart contracts, and miners mine. Faucet refers to a website or application that provides small amounts of new cryptocurrencies for free to help raise awareness of holding cryptocurrencies.

At first glance, Buidl looks like a spelling mistake, but it is actually a nod to the use of Hodl in digital currency transactions to refer to "hold on for dear life."

DAO is the abbreviation of “Distributed Autonomous Organization”, which refers to a blockchain-based organizational structure that can operate autonomously without human intervention and management.

Token Airdrops, also known as candy airdrops, refers to a new or existing project distributing its tokens for free according to certain rules, so as to attract more users to join and use it.

There are two ways to say LFG, Looking for Group and Let's f***ing go, but combined with the context of the red shirt this time, Silicon Stars think it may be more inclined to the latter. Generally speaking, LFG is used when you are excited about something, and is often used with the rocket emoji.

So, to translate what Sequoia said today, it means " The main network has come to the tap. We help courageous people build legendary DAOs and turn their ideas into reality. From creativity to token airdrops. Let's go together!"

Wow, has Sequoia changed after reading this? Anyway, after studying this, Silicon Star is going to buy a dictionary of the local currency circle to expand my vocabulary, otherwise I will not understand what these investment circle bigwigs are talking about in the future.

Image via Twitter

Changing the Twitter profile is not the only move by Sequoia to embrace Web 3. On Tuesday, Sequoia India’s Twitter account was the first to change its profile. Sequoia India not only located its location in the Metaverse, but also used a lot of cryptocurrency terms in its profile, and said that Sequoia will lead everyone to the Metaverse and beyond.

From this we can perhaps see that moving into the Canadian dollar currency field and fully embracing Web 3 is a global strategy that Sequoia Capital is currently exploring.

Just a few weeks ago, we also reported that Sequoia Capital will make an unprecedented structural adjustment. In the future, Sequoia will no longer adopt the traditional 10-year cycle system of the VC industry. The new fund will follow the idea of ​​continuous feedback loop, and can invest in the entire life cycle of the investment target company (from seed to after listing), and there is no exit deadline.

At the same time, Sequoia also followed the path of investment banks such as a16z and General Catalyst to transform into a registered investment advisor (RIA), giving Sequoia more flexibility in its investment scope and changing its name from Sequoia Capital to The Sequoia Fund. This move is also believed to be for better investment in emerging assets such as cryptocurrencies.

All signs indicate that this world-renowned old venture capital firm is undergoing a revolution of its own, trying to find a development path that is more in line with future trends.

From increasing investment to personally participating in the game, Sequoia is having more and more fun

This attempt to seek strategic transformation can also be seen from Sequoia's recent investment trends.

According to The Information, Sequoia’s cryptocurrency-related investments account for more than 25% of the total investment this year. It has participated in dozens of small and medium-sized projects, including FTX, a cryptocurrency and derivatives exchange, Animoca Brands, the metaverse game brand of SANDBOX’s parent company, BitClout, a new social network, Coinshift, an encrypted asset management platform, Beta Finance, a DeFi platform, and Parallel Finance, a DeFi parallel chain, with investments all over the world.

According to incomplete statistics, Sequoia's current investments in the crypto industry involve mining machine manufacturers, underlying technology development companies, exchanges, crypto financial service providers, gaming platforms, etc., covering all upstream and downstream links within the ecosystem.

Just a week ago, Sequoia Capital also played with NFT for the first time. On December 3, Sequoia Capital announced that it would auction its 2005 YouTube investment memo in the form of NFT. The auction will be held on Opensea, and anyone can bid. The proceeds will be used for the public ecosystem fund of 0xPARC (Cryptography Application Research Program on Ethereum).

Image from Sequoia Capital's official website

To this end, Sequoia also wrote a thousand-word article to explain why they are conducting this NFT auction experiment. In the article, Sequoia said, " Crypto is undergoing a Cambrian explosion. Although we have invested in cryptocurrencies for many years, the recent acceleration in the field is shocking. Last year, more than a quarter of Sequoia's new partners in our US/European business were crypto-related companies, and as part of our new structure, we will be more directly involved in governance and token equity. The question is no longer whether cryptocurrency will win mainstream adoption, but how blockchain technology will change the economy and our digital lives in the next generation. "

Just today, NFT collector Panksy.eth announced that it had won the seed memo for 200 Ethereum (about $880,000). Sequoia also donated the proceeds to 0xPARC as promised, and once again expressed its support for the crypto community.

Image from Sequoia Twitter

Top venture capital firms are entering the market one after another, betting on the next fission track

In fact, in addition to Sequoia Capital, a large number of top Silicon Valley venture capital firms have already entered the cryptocurrency track and established cryptocurrency venture funds.

Among them, Andreessen Horowitz, a legendary Silicon Valley venture capital firm, is one of the earliest venture capital firms to invest in crypto technology. As early as 2013, A16Z participated in the financing of Coinbase, an encrypted digital trading platform. In 2017, A16Z established its first $350 million cryptocurrency venture fund, and in 2020 established its second $515 million fund. In June this year, A16z announced the launch of a new $2.2 billion cryptocurrency venture fund, bringing its total crypto asset management scale to more than $3 billion. So far, A16Z has invested in at least 50 crypto startups and is the world's largest crypto investor.

Well-known Silicon Valley venture capital firms such as Founders Fund, Benchmark, and Google’s investment firm GV have all started investing in cryptocurrency-related projects. If Silicon Valley venture capital firms were still waiting and watching last year, this year they have all started to compete.

In addition, there are also many new investment institutions specialized in the crypto industry. Coinbase co-founder Fred Ehrsam and former Sequoia Capital partner Matt Huang jointly founded Paradigm, a venture capital firm focused on investing in the crypto industry, in 2018. Three years after its establishment, Paradigm has grown to a size of more than $10 billion and has invested in about 40 cryptocurrency companies at different stages and in different countries. Just last month, Paradigm One established a $2.5 billion crypto venture fund, once again setting a new record for the size of crypto venture capital funds.

According to PitchBook statistics, venture capital in the crypto and blockchain sectors has been booming unprecedentedly this year. As of the end of November, the total global investment has exceeded US$27 billion, which is more than the total of the past 10 years.

Image from New York Times

Among them, a trend worth noting is that more and more institutional investors are beginning to accept and participate in investments in this field. Other traditional capitals, such as pension funds and sovereign wealth funds, usually do not involve the crypto field in the past due to compliance and security considerations. However, as the industry continues to gain popularity, the concepts of LPs (investors) are gradually changing.

It is understood that Pantera Capital, another Silicon Valley investment institution focusing on the crypto industry, recently raised 75% of its $600 million crypto fund from traditional LPs. Most of the funds raised by Paradigm this time also came from institutional investors. A year or two ago, the main investors in these crypto investment funds were generally individual investors who got rich by speculating in cryptocurrencies.

According to The Information's forecast, crypto venture funds raised from LPs this year will exceed US$20 billion, accounting for more than half of the total funds raised, and this trend will continue in the future.