American venture capitalist Alfred Lin, a partner at Sequoia Capital, stood up for the firm’s multimillion-dollar investment in the now-bankrupt crypto exchange FTX.
Speaking at Bloomberg’s Tech Summit, Lin said if he were tasked with evaluating FTX again for the first time, Sequoia would likely make the same investment decision. “I looked at the work we did in 15 different ways. […] We probably would have made the investment again,” Lin reportedly stated.
Sequoia Capital has about $85 billion of assets under management, with investments in major technology companies and several crypto businesses.
The venture capital firm invested a total of $213.5 million in FTX and FTX US through two of its funds. The Global Growth Fund III held a $150 million investment in FTX — or 3% of the fund’s capital — while the Capital Global Equities Fund invested $63.5 million into both companies, representing less than 1% of its entire portfolio.
Sequoia sent a letter to its partner last November announcing it had marked both crypto exchange investments as complete losses after FTX closed. “We are in the business of taking risk. Some investments will surprise to the upside, and some will surprise to the downside,” explained the letter.
Here is the note we sent to our LPs in GGFIII regarding FTX. pic.twitter.com/Cgp1Yxk1pz
— Sequoia Capital (@sequoia) November 10, 2022
Lin shared the vision once again at Bloomberg’s event, saying Sequoia’s investment thesis relies on trusting founders and taking calculated risks, adding that sometimes investments fail to deliver. Despite FTX’s dramatic collapse and the loss of its funds, Lin said the venture capital firm is “still very excited about the concepts of crypto.”
Aside from the multimillion-dollar loss, FTX created other issues for the venture firm. Some users of the bankrupt exchange are now suing the financiers who backed the platform, including Sequoia, Thoma Bravo and Paradigm. The suit alleges the firms were involved in a promotional marketing campaign in 2021, claiming their efforts added an “air of legitimacy” to FTX. The three firms were all investors in the exchange’s $900 million Series B round in July 2021, the largest raise in crypto history.