Good morning 👋
And Happy Thanksgiving week. You should be receiving some other emails from our team this week on Black Friday deals we’re running for those of you who want more of our best content, products, and services (for less).
An LP in Sequoia released some data on their positions over the weekend, and the results are … okay.
TVPI is up, DPI is zero, and everybody is looking for liquidity. Sounds like a similar story, to everybody else in the venture world right now.
We break it all down in today’s piece.
P.S. 💰 Are you a full-time investor AND do you want to get paid more?
Today’s highlights
Data from a Sequoia LP
Hiive's private markets report
Amazon doubles down on Anthropic
The bell curve of investing in people
TOP
Some numbers from Sequoia’s 2020 fund 👀
Sequoia Capital’s 2020 flagship US venture fund, US Venture XVII, has defied the doom and gloom associated with pandemic-era deployment.
According to a UC Regents report analyzed by PitchBook, the fund saw a 24.6% valuation bump between mid-2023 and mid-2024, with a total markup of nearly 30% over two years.
Despite these gains, the fund has yet to deliver actual cash to its LPs.
With its TVPI climbing to 1.34x (solidly between the median and top quartile), the fund’s DPI remains at a stark zero—meaning no realized gains yet. Meanwhile, Sequoia has been busy navigating significant internal shifts, including a leadership change in 2022 and splitting its China and India arms into separate entities earlier this year.
Why it matters: There are three main takeaways from this report:
AI-driven companies are inflating valuations: As valuations rise in AI, funds are forced to pay up or sit out rounds. Those who choose to pay up are straining their funds’ dry powder which then creates a need to approach LPs for larger commitments.
TVPI shows promise, but it’s not enough: The fund’s TVPI rose from 1.13x to 1.34x in two years, positioning it between the median and top quartile. Paper returns are great and everything, but the thing about paper returns … is that they’re just paper returns.
Realized gains are lagging: This speaks to other funds across the venture ecosystem: DPI is missing, and that’s the only thing that matters right now. For Sequoia, the fund’s DPI remains slightly below the median, with no distributions back to UC Regents as of mid-2024.
What happens next: The main disconnect between GPs and LPs is in the returns, and the more LPs I talk to, the more I am reminded that TVPI means nothing in today’s world. Everybody wants distributions.
For GPs, that means:
Increased focus on liquidity strategies: With paper gains outpacing realized returns, VCs may lean into secondary sales, continuation funds, or other creative structures to provide LPs with partial liquidity while keeping their portfolios intact.
More pressure to deliver exits (faster): Investors are likely to prioritize strategies that bring cash back to LPs. This could mean faster exits for portfolio companies or leaning on public markets for IPOs.
Together with Hiive
AI + crypto = HUGE shifts in secondaries market 👁🗨
The secondaries market is on fire right now. We know this because we read Hiive’s latest private market report.
These reports offer a window into pricing, liquidity, and momentum trends in the pre-IPO market, and they use real-time data derived from user indications and transactions on Hiive’s platform.
We’ve looked, and we haven’t found better secondaries information and commentary anywhere else.
LINKS
🎁 Gear Guide—Our Gifts This Holiday: a16z Crypto provides their list of the latest gear and gadget recommendations
➕ How to Avoid Becoming a VC Meme and Actually Add Value: The Generalist shares a guide to avoid becoming a venture cliche and aiding your companies
👤 If You are Looking to Grow Your Career, Have this Conversation in your next 1-1 with you Manager: Here are some suggestions to take control of your career, starting with this end-of-year performance review
🔮 Future of the Workforce: CB Insights share how AI agents will transform enterprise workflows
🤩 22 Rules For Storytelling: Dickie Bush posts Pixar storyboard artist Emma Coats’ must-read for writers, entrepreneurs, and anyone else who wants to tell captivating stories
📶 Deal Flow Report: 11/24/24: The best AI for legal teams, a company making banking magical, and the future of human reasoning
TWEET
HEADLINES
Gilroy, former Coatue fintech head, and angel investor Rajaram launch VC firm (TechCrunch)
Amazon Doubles Down Investment In Anthropic (Crunchbase)
Manufacturers prep for new tariff regime (Pitchbook)
Norwest managing partner Jon Kossow on brands worthy of investment in 2024 (Glossy)
Poor Valuation Practices Have Slowed Innovation (Crunchbase)
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POLL
How does your fund's DPI compare to Sequoia's latest fund?
Thanks for reading this far and giving us a little bit of your attention this week.
Feel free to unsubscribe whenever this stops becoming valuable to you.
- Clay
RESULTS
Here are the results from our poll question in Friday’s piece:
Over the past year, have you told any companies to consider venture debt instead of taking on more equity?
🟨🟨🟨🟨⬜️⬜️ Yes - it's a smarter for most companies move right now ✅ (4)
🟨🟨🟨🟨⬜️⬜️ No - debt is a four-letter word ❌ (5)
🟩🟩🟩🟩🟩🟩 Don't care - show results (6)
15 Votes
