Following the sudden crash of FTX exchange, many firms tied to the platform also suffered, and many more who had invested in the platform concluded that their investments were the wrong move. However, American venture capitalist, Alfred Lin, who is also a partner at Sequoia Capital, insists that this is not the case. Sequoia lost over $213 million by investing in FTX.
Lin said in a recent talk that the investment was the right move at the time: “I looked at the work we did in 15 different ways,” said Lin. “We probably would have made the investment again.” His words indicate that there was nothing wrong with FTX or how it operated when the investment decision was made. At least according to the data that Sequoia had about the platform. There were no suspicious activities or red flags of any kind based on what the company managed to gather.
Sequoia Capital holds around $85 billion in assets under management and invested in multiple major technology companies. In addition to that, it also invested in a number of crypto-related companies. It used two of its funds to invest in FTX and FTX US, with the Global Growth Fund III holding a $150 million investment into the now-bankrupt crypto exchange, which represents around 3% of the fund’s total capital, and the Capital Global Equities Fund investing 1% of its portfolio — around $63.5 million — into both FTX and FTX US.
After FTX crashed, the company sent a letter to its partner, calling its “complete losses.” However, the company noted that it is in the business of taking risks, saying that some investors will surprise to the upside and some to the downside. Lin stressed that Sequoia’s investment thesis relies on trusting founders and taking calculated risks.
The positive thing is that the negative experience that the firm and its partners had with FTX did not discourage them from pursuing crypto investments. Lin noted that the venture capital firm’s “still very excited about the concept of crypto.” This is even more important given the fact that the created more problems for Sequoia than one. Of course, the loss of its investment was an issue, but also something that the company knew how to deal with. However, in the aftermath of the exchange’s crash, some of the bankrupt exchange’s users are suing the financiers of the platform. Sequoia is among them, in addition to Paradigm and Thoma Bravo.