The pandemic hastened the adoption of contactless digital transactions, especially for small sums, as individuals attempted to ward off the infection. Cash dependence has been fast diminishing since the advent of the smartphone age. With the advent of cryptocurrencies, digital payments are developing as a whole. Currencies like Bitcoin, Ethereum, and Monero are quickly gaining acceptance throughout the globe because they are a decentralised and extremely safe form of money. They are unquestionably the next development in the long history of payments, even though it could take some time for them to be acknowledged as a legitimate form of money by governments throughout the world.
American venture capital company Sequoia Capital, located in Menlo Park, California, specialises in seed, early, and growth stage investments in privately owned companies in the technology sector. As of 2022, the corporation was in charge of managing assets of roughly US$85 billion. Under the umbrella of Sequoia, three different venture capital firms may be found: one is primarily concerned with the United States and Europe, another with India and Southeast Asia, and a third with China. Apple, Cisco, Google, YouTube, Instagram, LinkedIn, PayPal, Reddit, Tumblr, WhatsApp, and Zoom are just a few of the well-known businesses the corporation has made successful investments.
Valentine sold the company to Doug Leone and Michael Moritz in the mid-1990s. Sequoia expanded its operations to Israel in 1999. In 2005, Sequoia Capital China, an American subsidiary, was established. Sequoia Capital purchased West Bridge Capital Partners, an Indian venture capital firm, in 2006. Sequoia Capital India was renamed afterwards. Sequoia Funding was named the best startup funding firm in 2013 by CB Insights. The business has 11 partners in the United States in 2016.
Leone was the in-charge senior partner. Moritz remained an active investment partner but stood down as CEO in 2012 after being diagnosed with an unexplained condition that, he said, would damage his quality of life for the next five to ten years.
Sequoia Capital is a stage-neutral investor with a strong focus on technology and innovation that has invested in and sponsored over 1500 startups globally. These firms have a total stock market value of $1.4 trillion as a result of Sequoia Capital’s financial backing and incubation.
Sequoia works with markets, not people – Sequoia’s goal is to capitalise on existing markets as quickly as possible, rather than to create new ones. As a result, they place more emphasis on market size and trends associated with a notion than on the qualities of the creator.
They invest carefully in complementary processes and software that will work alongside the original future technologies and markets because they spend methodically.
As a result of the Covid-19 problem, the firm has confronted the following issues:
Drop-in market activity: Between December and February, the company’s growth rates slowed dramatically.
Supply chain disruptions – China’s unprecedented economic embargo has a direct impact on global supply networks. Other suppliers may be required by hardware, direct-to-consumer, and retailing businesses. Although pure-play technology enterprises are less vulnerable to supply chain interruptions, they are nonetheless vulnerable to economic cascading effects.
Travel limitations and meeting cancellations: The corporation has restricted all “non-essential” travel.
Sequoia Capital internationally divides into three firms, the entity that manages more than USD 9.2 billion over 13 funds in India and Southeast Asia will be called Peak XV Partners. One Sequoia initiative focused on China, another on the US and Europe, and a third on India and Southeast Asia. Sequoia was well-known for its early backing of Google, Instagram, and some of China’s most successful internet enterprises.
Since Sequoia has been a major force behind China’s consumer internet industry for the past two decades, the Biden administration has been working on programmes to restrict US money flow into that country.
The strategy is viewed as a means of preventing China from developing vital national security technologies including semiconductors, quantum computing, and artificial intelligence. At the G-7 summit in late April, President Biden was looking for support from allied nations for his recommendations to restrict foreign investment in China.
PEAK XV is drawn from Sequoia Capital’s $2.85 billion raised in June last year to fuel its investments in Indian and Southeast Asian start-ups, the majority of which remains unutilized. Given the current financial crisis, it is a significant arsenal.
Sequoia began its Chinese investing venture in 2005, at a time when US-China relations were friendly and the geopolitical situation was simpler. According to a witness, Sequoia’s then-chief, Doug Leone, opened the door of his black SUV that year to find a genuine red carpet put out in front of him. According to the source, who requested anonymity since the event was private when he exited the car and approached the building for a meeting with Chinese tech titans, uniformed Chinese military stood at attention, saluting.
In the recent decade, Sequoia India has been able to invest in over 50 companies and 400 plus startups, with values of over US 1 billion, Peak XV Partners allegedly achieved an incredible $150 million profit after investing an initial $10 million in the producer of women’s leggings in November 2014. This results in an impressive internal rate of return (IRR) of 43%, or 15–16 times the initial investment.
The fund company has stakes in 39 companies that may become unicorns in 2-4 years, according to ASK Private Wealth Hurun India Future Unicorn Index 2022.
According to the report, Sequoia, which is in its 16th year of operation in India, is home to numerous well-known companies including TurtleMint, SaaS Labs, Classplus, DeHaat, Porter, Prog cap, and City Mall, all of which have the potential to become unicorns over the next two years. Sequoia is also the parent company of several other companies that are household brands.
One billion dollars, or around Rs 8,000 crore, is the yearly income of startups known as unicorns. Sequoia Capital has declared in a message that there is a strong belief that “now is our time” in India and Southeast Asia’s expanding economies and quickly changing societies.
As a result, the founder and VC ecosystem have praised the regional fund’s “independence,” which is seen as validation of India’s potential and proof of faith in the quality of entrepreneurs. “Peak XV Partners in India has a historic opportunity: in terms of economic indicators, India is where China was in 2008-09.” “While Sequoia’s first 17 years were spent laying the groundwork, Peak XV Partners’ next 17 years as Peak XV Partners could be truly wealth-creating,” says Rajesh Sawhney, CEO of Peak XV Partners.
Peak XV Partners, which had previously held 13.8% of Go Fashion, began a block purchase in December 2022. However, it had begun a block deal in December 2022 to sell a 3.7% stake for Rs 228 crore. Recent sources claim that the venture capital firm is actively negotiating to sell its final 10.18% stake in Go Fashion, which would signify a complete exit. The block deal is estimated to be worth Rs 625 crore in total. Approximately 55 lakh shares, or 10.18% of the total outstanding shares, belonged to Sequoia Capital, according to ownership data submitted to the BSE. Last year, Sequoia funded an additional $2.8 billion for investments in businesses in India and Southeast Asia. The majority of the remaining $2.5 billion will be invested by Peak XV, presently the largest venture capital firm in India and run by Sequoia’s former managing directors there.
Conclusion
Sequoia Capital has faced challenges due to the Covid-19 pandemic, including drop-in market activity, supply chain disruptions, and travel restrictions. The company divides into three firms, with Peak XV Partners managing over USD 9.2 billion over 13 funds in India and Southeast Asia. Sequoia Capital has been a major force behind China’s consumer internet industry for the past two decades, and the Biden administration has been working on programs to restrict US money flow into China. Peak XV Partners in India has a historic opportunity, as India is where China was in 2008-09. The founder and VC ecosystem have praised the regional fund’s independence, recognizing India’s potential and faith in the quality of entrepreneurs. As of 2022, the corporation managed assets of around $85 billion and invested in over 1500 startups globally. The company works with markets, focusing on complementary processes and software that will work alongside future technologies and markets. Sequoia Capital divides into three firms, with Peak XV Partners managing over USD 9.2 billion over 13 funds in India and Southeast Asia.
Peak XV Partners is drawn from Sequoia Capital’s $2.85 billion raised in June last year to fuel its investments in Indian and Southeast Asian start-ups. The fund has stakes in 39 companies that may become unicorns in 2-4 years, according to ASK Private Wealth Hurun India Future Unicorn Index 2022.
Written by – Krati Nitin
Edited by – Mehansh Barthwal