As crypto continues its meteoric rise, legendary venture capital firm Sequoia is not only competing with the a16z of the world, but with a growing crop of crypto-native venture capital funds who are seeing their assets swell and their influence is shaking up traditional venture capital hierarchies. In a conversation on TechCrunch’s new web3 podcast Chain reactionShaun Maguire, Crypto Partner at Sequoia, spoke about the company’s commitment to the industry, regulatory challenges, and what many crypto investors still don’t understand.
Earlier this year, Sequoia announced a $500-600 million sub-fund dedicated exclusively to buying cryptocurrencies. The company has made a number of equity investments in crypto startups over the years, including Fireblocks and FTX, but while Andreessen Horowitz was the first to commit to a dedicated crypto fund in 2018, Sequoia has continued to make its equity investments through its general funds.
As the crypto industry continues to create new unicorn startups, the rapid cooling of public market tech stocks has threatened to stall the growth of the emerging category, which has historically proven to be awfully sensitive to macro conditions. In our conversation, Maguire underscored his belief that many other funds dipping their toes into crypto “will pull back” when the market gets less frothy, but he believes Sequoia has already committed to a long relationship with the sector – “we have permanent intentions.
“Sequoia is very deliberate with everything we do and we spend an awful lot of time debating every change in strategy, everything, we debate every seed investment in sometimes excruciating detail, but it helps us take really good decisions and make decisions as a team rather than as individuals,” Maguire tells us. “When we make the decision to do something, it only happens if the whole team is behind the decision. so what you’ve seen unleashed with crypto over the last 18 months, we’ve gone from people having really, really positive opinions to the whole company being completely behind it.
The crypto category has dealt with many skeptics, some in the venture capital community, who believe that the advantages of the sector are oversold and that the promise of Web3 decentralization is only smoke and mirrors.
“I’m an absolute crypto max, but I think there’s a lot that’s misunderstood by the masses today,” Maguire said. “Decentralization is not a magic bullet that simply solves all problems and is better for everything. You know, for the vast majority of computing, you want it to be centralized. For many decision-making processes, centralization may be better for certain types of decisions. »
Maguire said more important than decentralization per se is the ability for users to “be able to walk away with their identity and data,” an effort that should protect consumers from abuse of the platform. While decentralization allows for some kind of consumer protection, Maguire still argues that the settlement of traditional investor protections shouldn’t be thrown away.
“One of the tensions I have in my head is that I think people sometimes forget that a lot of the consumer protections put in place by US law were won through hard-earned lessons over nearly 100 years. ‘a century. And there’s a lot of wisdom in that,” Maguire says. “In a way, one way of looking at what’s going on in crypto right now is almost like throwing away all the old rules and start with a blank canvas. I think what we’re seeing is a lot of the crypto community actually coming back in 90% of the situations and realizing that, “Oh, actually the way things were done in the past was actually quite good and got there for an optimal reason”, but 10% is like drastically different and… you can kind of significantly improve the whole system by fixing some of these things.