Key Takeaways
- • Half of 20 Sequoia Capital VC funds underperformed for UC Investments, with 10 funds marked down in value as of June 30, 2022, signaling broad portfolio weakness across Sequoia's recent vintage years since 2018.
- • UC Investments deployed $800 million into Sequoia funds but received only $43 million in cash distributions, demonstrating severely constrained capital returns despite substantial capital commitments from one of the largest institutional LPs in the U.S.
- • Sequoia's $8 billion Global Growth Fund (2018), which backed FTX, has failed to generate meaningful returns, underscoring the reputational and financial risk exposure from high-profile failed investments in the crypto sector.
- • Markdowns are likely significantly worse than June 2022 figures, given private market deterioration in the second half of 2022 and continued valuation compression in 2023, suggesting ongoing portfolio stress across Sequoia's recent funds.
- • VC fund opacity typically shields returns from public disclosure, making UC's records release through FOIA a rare institutional window into the performance gap between Sequoia's historical track record and recent vintage-year results.
Summary
The University of California's $28 billion endowment has experienced substantial losses across its Sequoia Capital partnership, with internal UC Investments data revealing that half of the 20 Sequoia funds entered since 2018 are underwater. As of June 30, 2022, UC Investments had deployed over $800 million across Sequoia's recent funds while receiving only $43 million in cash distributions—a capital return ratio that reflects severe portfolio underperformance for one of America's largest institutional allocators to venture capital.
Ten of Sequoia's funds in UC's portfolio have been marked down in value on paper, indicating broad-based weakness rather than isolated underperformance. The data obtained through public records request provides rare transparency into a venture capital market typically characterized by opacity. Sequoia's heavily scrutinized $8 billion Global Growth Fund from 2018, which held a major position in the subsequently collapsed crypto exchange FTX, has failed to return meaningful amounts of capital to investors, exemplifying the scale of losses in flagship recent vehicles.
The actual portfolio deterioration is likely substantially worse than these June 2022 figures suggest. The secondary venture markets experienced significant additional compression in the second half of 2022 and into 2023, forcing down valuations of private tech holdings. As funds revalue portfolio companies at markedly lower valuations than the elevated prices of 2020–2021, further downward adjustments are expected in more recent reporting periods beyond the data snapshot available through UC's filings.
This performance stands in sharp contrast to Sequoia's historical reputation as one of the venture industry's premier firms, with early investments in Apple, Cisco Systems, PayPal, and YouTube. Both Sequoia Capital and UC Investments declined to comment on the returns data, maintaining the confidentiality typical of limited partnership agreements. The disclosure nevertheless signals meaningful challenges in Sequoia's post-2018 investment strategy during a period of market excess and subsequent correction.
Ten of Sequoia's funds in UC's portfolio have been marked down in value on paper, indicating broad-based weakness rather than isolated underperformance. The data obtained through public records request provides rare transparency into a venture capital market typically characterized by opacity. Sequoia's heavily scrutinized $8 billion Global Growth Fund from 2018, which held a major position in the subsequently collapsed crypto exchange FTX, has failed to return meaningful amounts of capital to investors, exemplifying the scale of losses in flagship recent vehicles.
The actual portfolio deterioration is likely substantially worse than these June 2022 figures suggest. The secondary venture markets experienced significant additional compression in the second half of 2022 and into 2023, forcing down valuations of private tech holdings. As funds revalue portfolio companies at markedly lower valuations than the elevated prices of 2020–2021, further downward adjustments are expected in more recent reporting periods beyond the data snapshot available through UC's filings.
This performance stands in sharp contrast to Sequoia's historical reputation as one of the venture industry's premier firms, with early investments in Apple, Cisco Systems, PayPal, and YouTube. Both Sequoia Capital and UC Investments declined to comment on the returns data, maintaining the confidentiality typical of limited partnership agreements. The disclosure nevertheless signals meaningful challenges in Sequoia's post-2018 investment strategy during a period of market excess and subsequent correction.
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