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FTX Collapse Tarnishes Sequoia’s Reputation, Prompts Apology

Sequoia Capital's Alfred Lin. Photo by Getty Images
Sequoia Capital's Alfred Lin. Photo by Getty Images
Nov. 22, 2022 12:53 PM PST

Sequoia Capital’s Alfred Lin made a name for himself as a loyal confidant to the tenacious, often-doubted founders of companies like DoorDash and Airbnb, a commitment that helped catapult him to the No. 1 spot on Forbes’ list of top venture capitalists. Then Sam Bankman-Fried, the founder of FTX, entered his life.

The spectacular flameout of the cryptocurrency exchange over the past couple of weeks has wiped away the $214 million that entities connected with Sequoia put into the firm and blemished the reputation of one of Silicon Valley’s most esteemed venture firms. In a sign of how humbling the saga has been for Sequoia, Lin and the firm’s U.S. leader Roelof Botha and crypto-focused partner Shaun Maguire, on Tuesday held a call with the firm’s limited partners to apologize for the firm’s investment in FTX and to share the lessons they’ve learned so far amid FTX’s bankruptcy proceedings, according to a person with direct knowledge of the matter.

Lin told the limited partners that Bankman-Fried had misled Sequoia about the relationship between FTX and Alameda Research. Moving forward, Sequoia partners said they would be more cautious about making substantial investments in companies whose founders they did not have a longstanding relationship with for investments made out of its global growth and expansion funds.

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