Silicon Valley venture capital firm Sequoia Capital has launched a new fund to invest exclusively in cryptocurrency—with up to $600 million to play with.
Sequoia Capital announced Thursday that the fund, Sequoia Crypto Fund, would be used specifically on its liquid tokens and digital assets, and it has set aside between $500-$600 million.
Sequoia Capital, a 50-year-old firm, told Decrypt it wanted better control of its digital assets, as staking, providing liquidity on a protocol, and voting in governance on networks was typically more time-consuming and difficult.
“Any of the active management that you do with a token that’s very different to from what you do with a share, has been more challenging, just from an infrastructure and speed perspective, and so what we wanted to do is create a separate vehicle that would give us a lot more flexibility to do all these more crypto-native activities with the liquid tokens we have,” said Michelle Bailhe, a Partner at Sequoia Capital.
The firm added in a statement: “Sequoia Crypto Fund complements our broader commitment to crypto. Our goal with this fund is to participate more actively in protocols, better support token-only projects, and learn by doing ourselves.”
“We remain committed to working collaboratively with the crypto community, including providing ongoing support for open-source research.”
Sequoia Capital has so far invested in Bitcoin, Ethereum, Strips Finance, Parallel Finance, Ironfish, Decentralized Social (DeSo), and Filecoin. It also has invested in a number of other tokens not yet announced, according to the firm.
It said that its network in the crypto space asked it to take a “more active role in managing” its tokens—including staking them. Staking refers to the process of users locking-up their cryptocurrency, often to provide liquidity to a protocol or network, in exchange for rewards in tokens.
It can also refer to the process by which the operators of proof-of-stake networks lock up their tokens to help the blockchain validate transactions.
A number of big cryptocurrencies like Solana and Tezos already use this consensus mechanism, and the second-largest by market cap, Ethereum, is in the process of making the transition. Proof of stake is different to Bitcoin’s proof-of-work process, which is much more energy intensive.
Shaun Maguire, a partner at Sequoia, added that previously the firm didn’t have custody of the tokens but this investment would help. “We view this as the last piece of crypto where we haven’t been able to add value for our portfolio companies.”
“Sequoia has a very long-term view as an investor. We like to take 10 plus year views on trends and new protocols,” he added.
Sequoia Capital has already partnered with some of the biggest names in the crypto world, including the CEO of the FTX exchange, Sam Bankman-Fried, and Jack Dorsey, the co-founder of Twitter and Bitcoin enthusiast.
Editor's note: This article was updated after publication to include comments from Sequoia Capital.