Last night in SF, editor-hosted venture capitalist Alfred Lin of Sequoia Capital sat down for a fireside chat to discuss the evolution of his firm. Despite its unblemished record of success, their $200M investment in crypto currency exchange FTX is now marring that reputation.
Sequoia’s once-proud investment has stained the firm and their liaison Lin, who worked closely with CEO Sam Bankman-Fried for 18 months. Yesterday, he candidly reflected on how it felt to see his gamble turn sour.
Lin reflects on whether there were any signs of Bankman-Fried’s dishonesty that he missed. After a pause, he admits: “He was very smart and his responses were logical and concise. Could I have spotted something? Maybe not – at the time, no; but looking back, it’s difficult to accept that we had an 18-month working relationship without me seeing it.”
Lin admitted it was difficult, given he had topped Forbes’ Midas List the year prior, but didn’t elaborate further. He did suggest though that Bankman-Fried’s approach highlighted one of VC’s most powerful assets – a source of ongoing distress for him.
Lin explains, “It’s a trust business. We must both trust and verify, verifying what we can. But we always start from a position of trusting the founders; if you don’t believe in them, why invest?”
Image Credit: Dani Padgett (link opens in new window)
Lin commented on FTX, including his feelings towards Bankman-Fried. He defended Sequoia’s decision to maintain their positions in portfolio companies beyond the public offering stage.
At the event, Lin confirmed that Sequoia had reduced its management fees on two funds launched in 2019: a $950 million ecosystem fund and a $600 million crypto fund. Rather than charging investors based on their committed capital, as is standard industry practice, Sequoia is only charging them for what they have actually invested. 10% of the crypto fund has been deployed so far; Sequoia remains “long-term optimistic” about crypto.
Lin discussed how generative AI is a game-changer for both VCs and investors, highlighting the potential it has to create compelling opportunities.
The full chat is available to view below.
