California-based venture capital firm, Sequoia Capital has launched a new crypto-focused Fund which is believed to be worth about $500 million to $600 million. As announced by Bloomberg, the fund will be targeted towards upgrading and restructuring startups that are crypto-inclined, as well as redefining Sequoia’s role in its broad portfolio.
The year 2021 saw the highest allocation of funds from Venture Capital industries towards digital currency and blockchain. A huge allocation of $25.2 billion was received in the blockchain ecosystem. This figure amounted to a 713% expansion from that of the former year.
The funds received from the venture capital firms have concentrated on crypto adoption, non-fungible tokens, DeFi, and crypto exchange projects. Recently, there has been more emphasis on metaverse, decentralized finance, and Web3.0 by venture capitalists, and these new niches have also been receiving backing from Sequoia.
This recently unveiled Fund is only a fraction of the 3 division funds that Sequoia Capital had announced last year but was formally inducted on Thursday. All funds and investment will now pass through Sequoia Capital Fund, and this present liquidity pool will depend on capital allocated by the limited partners (LPs) of the firm.
For the California venture capital firm, there will be a transition from the conventional structure of VC funding after these rounds in the near future. The timeline designated for return on investment (ROI) for limited partners (LPs) which is within a decade might be affected.
Crypto Participation From California-based Venture Capital Firm
Sequoia Capital has spearheaded other fundraise in the past with collaboration from several investors. Recently, the firm was the lead investor in the funding for Layer-2 protocol Polygon (MATIC) which was worth $450 million as reported by CryptoMarketsBeat.
Polygon increased its valuation to $2 billion after the funding round and increased its token’s market cap to $14.5 billion. The funds were raised to improve the scalability of the network to make Ethereum blockchain more usable ahead of the network upgrading from its current Proof-of-work framework to a Proof-of-Stake model.
Sequoia had previously taken part in a funding round of $1.15 billion for Citadel Securities as the firm was on the verge of expanding its trade to digital currencies and blockchain. Sequoia has also backed an equity round for a decentralized finance account, DeBank worth $25 million in value, and Stark Ware, a $50 million fundraise.
This new Fund will push the company from being a passive partner to a more involved one as liquidity provision amongst other operational deeds are now on its radar for crypto startups.