Sequoia Capital has announced a series of changes. In a memo titled “The Sequoia of Tomorrow”, the firm outlined the closure of its London office, the end of its Arc accelerator and Scouts programs, and a flatter partnership structure. It said it was coming out of a roughly 20-year expansionary phase.
The changes were detailed in a memo posted to X on Wednesday. The firm says it has removed much of the complexity associated with the Sequoia Capital Fund and describes hierarchy as an unintended side effect. It has raised roughly $10 billion in new funds.
“We simply don't see the need for a local presence,” the memo says of the London office closure. It says Sequoia believes Europe will continue to produce “outlier founders” that it can support from the Bay Area. The decision follows Andreessen Horowitz shuttering its London office last year and Coatue closing its own in 2024.
Sequoia says it is coming out of a roughly 20-year expansionary phase during which it built businesses in multiple geographies. In 2023, it separated from its China and India/Southeast Asia arms.
Sequoia also ended the Arc accelerator and Scouts program, two initiatives that put the firm close to young founders. Scouts, launched around 2009, gave small checks to founders and operators to invest on the firm's behalf; TechCrunch says half the industry has anecdotally copied it in some form. Jason Calacanis pointed Sequoia to Uber through the program, and Sam Altman brought Stripe to Sequoia as a scout. Arc, launched in 2022, was a batch accelerator for pre-seed and seed founders.
The restructure consolidates the firm's investing teams. There is no longer a division between early and growth stage teams, and the Monday partner meeting has been eliminated. The firm now operates with seven general partners: Alfred Lin, Pat Grady, Andrew Reed, Shaun Maguire, Konstantine Buhler, Sonya Huang, and David Cahn.
Personnel changes also include Jess Lee, the firm's first female partner and an early-stage investor who oversaw its Arc program, now shown as chief product officer. Investor Stephanie Zhan has left the firm and announced last month that she is launching her own firm. Roelof Botha, who was voted out as senior steward last year, fully severed ties this summer. Carl Eschenbach, the former Workday CEO, returned as a full-time partner in March. The memo says the partnership “reinvigorated the GOAT,” Doug Leone.
The memo acknowledged the difficulty of the changes, saying it was “scary to break something that's already working just fine” and painful to say goodbye to great people.
Analysis
Why This Matters
- The restructure signals a dramatic retreat from the global expansion trend that defined top-tier venture capital over the past decade.
- It reaffirms the Bay Area as the unchallenged centre of gravity for tech venture capital investment and talent.
- The end of the Arc and Scouts programs closes two prominent channels for early-stage deal flow and founder engagement.
Background
Sequoia has been one of the most prominent VC firms for decades, backing companies like Google, Stripe, and Airbnb. The firm has undergone significant structural changes in recent years. In 2023, it separated from its China and India/Southeast Asian arms, ending over a decade of global franchise operations.
Key Perspectives
- Sequoia Capital: Argues the changes are essential for focus and quality, removing complexity and allowing the firm to operate nimbly in what it calls a golden age of multiple tectonic shifts.
- European founders and VCs: Face a shrinking pool of dedicated local capital and support, as several prominent US firms pull back from European offices.
- Luciana Lixandru: The London-based partner declined to move to San Francisco, remaining a partner and investing personally in European founders from Europe.
What to Watch
- Whether European founders follow Sequoia's implied push to relocate to the Bay Area for access to capital.
- Whether other large VC firms see an opportunity to capture talent and market share in the regions Sequoia is exiting.
- The performance of the new, flatter structure compared to the previous global model.
Checked
12 claims in this story checked against 1 source: 12 supported.
Show each claim
- SupportedSequoia is pulling its focus back to the Bay Area.TechCrunch: “Sequoia says it wants to put more energy behind fewer people and things. ... Sequoia can support them from the Bay Area.”
- SupportedSequoia is closing its London office and ending its Arc accelerator and Scouts programs.TechCrunch: “It is also closing its London office, shutting down its Arc accelerator and its Scouts program”
- SupportedThe memo says, “We simply don't see the need for a local presence,” about closing the London office.TechCrunch: ““We simply don’t see the need for a local presence,” the memo says”
- SupportedSequoia believes Europe will continue to produce “outlier founders” it can support from the Bay Area.TechCrunch: “We believe that Europe will continue to produce outlier founders and companies, and that we can continue to provide world class support from our home base in the Bay Area.”
- SupportedThe firm has raised roughly $10 billion in new funds.TechCrunch: “The firm has raised roughly $10 billion in new funds, it says.”
- SupportedSequoia is coming out of a roughly 20-year expansionary phase during which it built businesses in multiple geographies.TechCrunch: “We are coming out of a ~20 year expansionary phase, during which we built multiple businesses in multiple geos.”
- SupportedThe memo says hierarchy was an unintended side effect of that expansion.TechCrunch: “One unintended side effect was hierarchy; it required real management to run the operating side of our business, and this crept over into the investing team.”
- SupportedScouts, launched around 2009, gave founders and operators small checks to invest on Sequoia's behalf, and TechCrunch says half the industry has copied it in some form anecdotally.TechCrunch: “Scouts , which Sequoia launched around 2009 and, anecdotally, half the industry has since copied in some form, gave small checks to founders and operators to invest on the firm’s behalf”
- SupportedArc launched in 2022 as a batch accelerator for pre-seed and seed founders.TechCrunch: “Arc , launched in March 2022, was Sequoia’s answer to Y Combinator: a batch accelerator for pre-seed and seed founders”
- SupportedSequoia has merged its early-stage and growth teams and eliminated the Monday partner meeting.TechCrunch: “merging its early-stage and growth teams into one, flattening its partnership, and killing the Monday partner meeting.”
- SupportedSequoia now has seven general partners: Alfred Lin, Pat Grady, Andrew Reed, Shaun Maguire, Konstantine Buhler, Sonya Huang and David Cahn.TechCrunch: “there are now seven general partners who primarily own and operate Sequoia: Alfred Lin and Pat Grady ... along with Andrew Reed, Shaun Maguire, Konstantine Buhler, Sonya Huang, and David Cahn”
- SupportedJess Lee is shown as chief product officer; Stephanie Zhan has left Sequoia and announced last month that she is launching her own firm.TechCrunch: “Jess Lee ... is no longer shown on Sequoia’s investor page but rather as an operator in the role of its chief product officer. Stephanie Zhan ... has meanwhile left the firm entirely, announcing last month that she is launching her own new firm.”
