Sequoia Capital explains what crypto founders want from VCs

Episode 27 of Season 4 of The Scoop was recorded remotely with The Block’s Frank Chaparro, and Shaun Maguire & Michelle Bailhe, Partners at Sequoia.

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Sequoia Capital has been invested in crypto since 2015, but the VC firm recently raised the stakes by announcing its first sector-specific fund: a $500 million Sequoia Crypto Fund focused on liquid tokens and digital assets.

In this episode of The Scoop, Sequoia partners Shaun Maguire and Michelle Bailhe sit down with host Frank Chaparro to discuss Sequoia’s new fund and explain how the power dynamic between venture firms and crypto native founders has evolved.

As Maguire explained:

“Crypto founders now have a lot more options than they did in the past. There were so few VCs that would invest in crypto - at least during the bear markets the last five years - those funds had huge amounts of leverage and could operate in a way that was very beneficial to the funds. That leverage has shifted to the founders, and now the founders get to be very selective and choose what they want.”

So what are these crypto-native founders looking for when it comes to selecting VC firms? Maguire believes they are looking for funds that can keep pace with the fast-paced crypto industry:

“Crypto moves so fast, crypto founders want to work with funds that can move incredibly fast,  they want to work with funds that deeply understand their problems, deeply understand the landscape. Those properties are primarily going to live within crypto specific funds rather than in generalist funds.”

The crypto-specific fund structure certainly seems to be working well for Sequoia, which recently led a $135 million Series A+ investment in LayerZero Labs, along with FTX Ventures and A16Z.

In fact, Bailhe believes that this is why Sequoia’s technical knowledge and understanding of the problems in cross-chain interoperability that LayerZero Labs is attempting to solve made such an impact on co-founder Bryan Pellegrino.

“I remember him saying, ‘You really tried to engage on the way that we had constructed LayerZero and how it was working, versus focusing on kind of the easy questions…’” Bailhe recalled. “They felt like they would get people who were deeply committed to crypto.”

During this episode, Chaparro, Maguire, and Bailhe also discuss:

  • Crypto bridges and bridge exploits
  • Sequoia's investment in liquid tokens
  • Yuga Labs & NFT investments

This episode is brought to you by our sponsors FireblocksCoinbase Prime & Cross River
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About Cross River
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