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Silicon Valley’s Sequoia Capital names new leader

Sequoia Capital, one of Silicon Valley’s oldest and most successful venture capital firms, is changing leadership as the 50-year-old backer of tech industry titans including Apple and Google passes the torch to a third generation of investors.

Roelof Botha, a partner at Sequoia who leads operations in the US and Europe, will assume leadership of the company in July, succeeding billionaire investor Doug Leone, who is retiring at the age of 65. Botha’s appointment marks the third change in Sequoia’s leadership since it was founded in 1972 by venture capital industry pioneer Don Valentine.

The appointment highlighted a delicate balance in Sequoia’s global organization between its US and European operations and its powerful Chinese arm and burgeoning Indian funds.

In a letter to Sequoia investors, Leone laid out limitations to Botha’s new role that leave him little direct control over the Chinese business. Under Neil Shen, Sequoia China has backed a number of successful startups including ByteDance, Meituan and Pinduoduo, making Sequoia’s global profit and power sharing a constant source of speculation.

Sequoia dropped the title of global managing partner bestowed on its predecessors, and Botha became Sequoia’s “senior steward” instead. He would “set the overall tone” for Sequoia, Leone said, and also be responsible for “centralized functions, including compliance, finance and culture.” An existing arrangement whereby Botha oversees US and European funds and Shen is responsible for China would continue, he added.

Leone denied that the deal would leave his successor with less power, describing it as part of a two to three-year transition to a more centralized operational structure designed to support a fully decentralized approach to investing.

He told the Financial Times that Botha will oversee a new organizational structure, including chief finance, compliance, information, legal and operating officers with a global mandate, but that investment decisions will be made in affected countries. There would be no change to a profit-sharing scheme that allows partners to benefit from global fund returns in proportion to their region’s contribution, he added.

“We want to make sure the person leading isn’t lost to management,” Leone said.

Sequoia has backed many of Silicon Valley’s most successful companies, including Cisco, Apple and Google. In 1996, Valentine passed leadership of the firm to Leone and Sir Michael Moritz, who together ran the Menlo Park, California-based firm until 2012, when Moritz gave up his day-to-day responsibilities due to ill health.

During Leone’s tenure, Sequoia globalized its business and delivered strong returns in an industry where success can be difficult to replicate. Recent successes include apartment rental platform Airbnb, fintechs Stripe and Square, cybersecurity specialist Okta, and software company Snowflake.

Botha has played a big part in some of Sequoia’s greatest fortunes and its expansion.

A native South African who worked with Elon Musk at PayPal before joining Sequoia in 2003, Botha was instrumental in building what he said was a “permanent” fund structure could grow up to a size of 20 billion US dollars. These funds are designed to hold investments longer than a typical venture firm, giving them a better chance of participating in the tremendous returns that can come as technology companies mature.

Two investments he led — in YouTube and Instagram — were hailed as successful when the companies sold for $1.65 billion and $1 billion, respectively, although that deprived investors of much larger gains had they remained independent . In contrast, another Botha investment, financial firm Block, formerly known as Square, rose to a market cap of more than $150 billion over the past year before falling behind.

“His keen instinct for innovation has shaped our partnership and our industry,” Leone said in his letter, which highlighted the permanent fund as an initiative “that has transformed our business.”

https://www.ft.com/content/0b0e34a3-daf2-4f7b-b185-42142e52add5 Silicon Valley’s Sequoia Capital names new leader

Adam Bradshaw

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