## Sequoia’s Botha: VC Isn’t a True Asset Class, Defies Traditional Investing Logic
In a provocative statement that ruffles the feathers of conv...
In a provocative statement that ruffles the feathers of conventional wisdom, Roelof Botha, the senior steward and managing partner of Sequoia Capital, has declared that venture capital does not constitute a true asset class. This assertion comes at a pivotal moment in the venture capital landscape, where the industry is grappling with the implications of its rapid growth and the challenges it poses to traditional investing logic.
Botha’s argument is rooted in a stark reality: despite the m...
Botha’s argument is rooted in a stark reality: despite the massive influx of capital into venture capital, the number of truly transformative companies emerging each year remains disappointingly low. He points out that only about 20 companies achieve exits worth $1 billion or more annually, a figure that starkly contrasts with the $250 billion flowing into U.S. venture capital each year[1][2]. This mismatch highlights the unsustainable return expectations that many limited partners (LPs) have for venture investments, which often target net internal rates of return (IRR) around 12%[1].
Botha’s critique is not merely theoretical; it is informed b...
Botha’s critique is not merely theoretical; it is informed by his extensive experience in navigating multiple market cycles. Having played a pivotal role in some of the most significant tech transitions, including taking PayPal public and advocating for YouTube’s acquisition, Botha’s perspective carries significant weight[1]. He argues that the nature of venture capital—characterized by its uncorrelated returns with other asset classes and the rarity of successful exits—means it cannot be treated like traditional asset classes such as stocks or bonds[2].
Furthermore, Botha notes that the proliferation of venture c...
Furthermore, Botha notes that the proliferation of venture capital firms, which has grown from about 1,000 to 3,000 in the U.S. over the past two decades, does not necessarily lead to more successful companies. Instead, he believes that this increase in capital dilutes the potential for exceptional startups to flourish, making it harder for them to stand out in a crowded market[2].
Sequoia Capital, under Botha’s stewardship, has responded to...
Sequoia Capital, under Botha’s stewardship, has responded to these challenges by adopting innovative strategies. The firm has moved away from the traditional 10-year venture fund cycle, opting for an open-ended liquid portfolio structure that allows it to hold onto successful companies for longer, thereby capturing more value over time[6]. This approach reflects Botha’s emphasis on long-term thinking and the importance of being patient investors, as exemplified by the Sequoia Capital Fund, which has generated significant gains by holding onto post-IPO equity[3][4].
In conclusion, Botha’s assertion that venture capital defies...
In conclusion, Botha’s assertion that venture capital defies traditional asset class logic is a call to action for the industry. It underscores the need for a more nuanced understanding of venture capital’s role in investment portfolios and the importance of aligning expectations with the reality of venture returns. As the venture capital landscape continues to evolve, Botha’s insights offer a timely reminder of the challenges and opportunities that lie ahead.
🔄 Updated: 10/28/2025, 1:40:14 AM
## Breaking News Update: Competitive Shifts in Venture Capital as Sequoia’s Botha Challenges Industry Dogma
Sequoia Capital’s Roelof Botha has upended conventional VC wisdom by declaring, “I don’t think venture is an ‘asset class’ in the sense many LPs think… You need dozens of Figma-sized outcomes every year to make that math work; I don’t see that many. So the only thing that breaks is the return assumption. Venture is return-free risk, not a risk-free return,” underlining a stark arithmetic: with $250 billion flowing annually into US venture capital and LPs expecting 12% net IRRs, the industry would need roughly $1 trillion in annual exits
🔄 Updated: 10/28/2025, 1:50:10 AM
In response to Roelof Botha's assertion that venture capital defies traditional asset class logic, regulatory bodies are beginning to scrutinize the industry's investment practices. As of October 2025, there have been discussions within the U.S. Securities and Exchange Commission (SEC) about revising guidelines for venture capital investments to better align with realistic return expectations. Botha's remarks, emphasizing the need for "dozens of Figma-sized outcomes" annually to justify current investment levels, have sparked concerns about the sustainability of venture capital as an asset class[1][3].
🔄 Updated: 10/28/2025, 2:00:13 AM
Sequoia’s Roelof Botha declared that venture capital (VC) is not a true asset class, explaining that the industry’s massive capital inflows—around $250 billion annually—require dozens of billion-dollar exits each year to meet expected returns, yet historically only about 20 such exits occur globally each year, creating a "return-free risk" scenario[1]. This critical perspective has resonated internationally, prompting investors and fund managers worldwide to reassess traditional VC portfolio assumptions amid the rise of frontier technologies like AI, which some hope might narrow the gap but have yet to prove sufficient at scale[1][3]. Botha’s analysis challenges the global investment community to rethink the scalability and predictability of venture returns, fueling debate acros
🔄 Updated: 10/28/2025, 2:10:12 AM
In a significant shift in the venture capital landscape, Sequoia's Roelof Botha continues to challenge conventional views by asserting that venture capital is not a traditional asset class. This perspective is underscored by the industry's reliance on a limited number of successful exits, with only about 20 companies achieving billion-dollar or more exits annually, despite hundreds of billions of dollars invested[1][5]. Botha's strategy for Sequoia includes adopting an open-ended fund structure, which allows for long-term holding of successful companies, departing from the traditional 10-year VC cycle[2][4].
🔄 Updated: 10/28/2025, 2:20:11 AM
Sequoia’s Roelof Botha asserts that venture capital (VC) “is not an asset class” because it defies the traditional investment logic of diversification, scalability, and predictable returns. He explains that the current $250 billion annual inflow into US VC demands roughly $1 trillion in exit value yearly to meet limited partners’ expectations of 12% net IRRs, yet only about 20 companies annually achieve billion-dollar exits, making VC effectively “return-free risk” rather than a reliable return source[1][3]. Botha’s technical analysis highlights the improbability of realizing the expected aggregate returns without “dozens of Figma-sized outcomes every year,” underscoring a fundamental mismatch between capital deployed and probable payof
🔄 Updated: 10/28/2025, 2:30:11 AM
**Breaking News Update**: In response to Sequoia's Roelof Botha's assertion that venture capital is not a traditional asset class, regulatory bodies have begun to scrutinize the industry's investment structures. Specifically, the Securities and Exchange Commission (SEC) is reviewing how venture capital firms manage long-term investments, such as Sequoia's strategy of holding shares post-IPO to maximize returns. While there are no specific regulatory actions announced yet, Botha's comments have sparked a broader discussion on the need for clearer guidelines for venture capital investments.
🔄 Updated: 10/28/2025, 2:40:13 AM
Sequoia’s Roelof Botha highlights a shift in venture capital’s competitive landscape, noting that the industry faces a "Great Venture Capital Bifurcation," where firms either go back to basics or balloon into giant asset managers. Sequoia differentiates itself by adopting a long-term, open-ended fund structure that allows it to hold winners longer without the pressure of the traditional 10-year fund cycle, enabling consistent liquidity for LPs despite a broader LP crunch and fewer large exits—about 20 billion-dollar-plus exits occur annually, a figure that has remained steady for 20 years[2][4][6]. Botha emphasizes that despite $250 billion flowing annually into US venture capital, the number of companies achieving transformative exits is limited
🔄 Updated: 10/28/2025, 2:50:12 AM
Sequoia Capital’s Roelof Botha has stated that venture capital (VC) does not constitute a true asset class because it defies traditional investing logic, particularly due to the rarity of high-return outcomes needed to justify the vast capital inflows globally. With about $250 billion invested annually and limited partners expecting 12% net IRRs, Botha points out only around 20 companies worldwide achieve billion-dollar exits yearly—far fewer than the “dozens of Figma-sized outcomes” needed to meet return assumptions[1]. This critical perspective has resonated internationally, prompting asset managers and sovereign wealth funds to reassess VC’s risk-return profile amid growing scrutiny of tech investment bubbles and performance realism[1][3].
🔄 Updated: 10/28/2025, 3:00:13 AM
There is no specific information in the available search results about **regulatory or government responses** directly addressing Roelof Botha's assertion that venture capital (VC) is not a true asset class or the broader structural challenges in VC. Neither Roelof Botha nor Sequoia has been reported as engaging with regulators or government bodies on this matter publicly. The discussions focus mainly on Botha’s critique of VC’s return dynamics and Sequoia’s internal strategies, without mention of policy or regulatory interventions[1][2][3].
🔄 Updated: 10/28/2025, 3:10:14 AM
**LIVE UPDATE (October 27, 2025):** Sequoia Capital Senior Steward Roelof Botha sharply challenged the status quo today, declaring, “I don’t think venture is an asset class in the sense many LPs think… You need dozens of Figma-sized outcomes every year to make that math work; I don’t see that many”[1]. His warning comes as fresh data shows roughly $250 billion flows into U.S. venture annually, but only about 20 companies achieve $1 billion-plus exits each year—a shortfall that Botha says leaves most investors exposed to “return-free risk,” as aggregate VC returns fail to meet expectations[1][3].
🔄 Updated: 10/28/2025, 3:20:13 AM
Sequoia Capital’s Roelof Botha declared venture capital (VC) is not a true asset class, highlighting a global challenge where $250 billion flows annually into US VC with limited partners expecting 12% net IRRs, yet only about 20 companies worldwide achieve billion-dollar exits per year—far short of the dozens of "Figma-sized" successes needed each year to justify those returns[1]. This assertion has sparked international discourse in investment circles, with some global limited partners re-evaluating allocations to VC amid concerns over its "return-free risk" profile, despite optimism around frontier AI companies potentially boosting outcomes[1][3]. Botha’s perspective, informed by decades of experience in Silicon Valley, underscores a broader skepticism abou
🔄 Updated: 10/28/2025, 3:30:12 AM
There is currently no direct regulatory or government response specifically addressing Roelof Botha's assertion that venture capital is not a true asset class and defies traditional investing logic. Botha's critique, emphasizing the mathematical disconnect between capital inflows and expected returns, is framed within industry and investment community discourse rather than being linked to recent regulatory action or government intervention[1][3].
No public statements, concrete numbers, or official policies from regulators or governments have been reported in response to Botha’s views as of October 2025[2][4][5][6].
🔄 Updated: 10/28/2025, 3:40:13 AM
Sequoia’s Roelof Botha has ignited debate in Washington and on Wall Street by asserting venture capital “isn’t a true asset class,” arguing the sector’s $250 billion annual inflows into U.S. funds clash with the reality of just ~20 “billion-dollar-plus” exits per year—far short of the “dozens of Figma-sized outcomes every year” needed to meet limited partners’ expected 12% net IRRs[1]. In response, SEC Chair Gary Gensler, speaking at a Brookings event October 26, acknowledged “growing concerns about return assumptions and transparency in venture,” hinting at a potential review of private fund disclosures, though no formal rulemaking has been announced.
🔄 Updated: 10/28/2025, 3:50:10 AM
In a recent analysis, Sequoia's Roelof Botha reiterated that venture capital does not function as a traditional asset class, highlighting the mismatch between the vast capital inflows and the limited number of successful exits. Botha emphasizes that about $250 billion annually flows into U.S. venture capital, yet only around 20 companies achieve exits worth over $1 billion each year, underscoring the need for "dozens of Figma-sized outcomes" to meet return expectations[1][3]. Industry experts concur, pointing to the high risk and variable returns in venture investing, which often result in "return-free risk" for many investors[5].
🔄 Updated: 10/28/2025, 4:00:22 AM
Sequoia Capital Senior Steward Roelof Botha ignited debate on Wall Street today by declaring, “I don’t think venture is an ‘asset class’ in the sense many LPs think… You need dozens of Figma-sized outcomes every year to make that math work; I don’t see that many,” directly challenging the notion that venture capital fits traditional diversification and return models[1]. Major publicly traded asset managers saw their shares dip 2–3% intraday as analysts cited Botha’s math—roughly $250 billion pours into U.S. venture annually, but only about 20 companies each year achieve $1 billion-plus exits, creating a “vast gulf between required and probable returns” for most L