‘Era of being rewarded for hypergrowth at any costs is quickly coming to an end,’ Sequoia capital tells startup founders

• ByStartupStory     |    May 25, 2022

Sequoia capital issued an advisory on the global downturn warning the portfolio company founders against the current market conditions.

Sequoia, founded 50 years ago in 1972 by Don Valentine, is an American venture capital firm is headquartered in Menlo Park, California.

The capital firm mentioned in a 51 page note about the loose monetary policies that has resulted in negative interest rates which means that ‘money is no longer free’. The effortless fundraising and driven up valuations will now have massive implications.A “crucible moment”, one that would present “challenges and opportunities” for many of its portfolio founders says the fund.

We foresaw some of this when we first published our Black Swan memo at the start of the Covid in early 2020. What we got wrong was the monetary and fiscal policy response that followed and the distortion field that created,” Sequoia wrote in a confidential advisory note to the founders of companies where it invested in.

The ongoing conditions like sustained inflation, conflicts, geo-political instability is said to limit the quick fix policy. It is believed that this will not be a steep recovery followed by  equally swift V shaped recovery which was seen during the pandemic in 2020.The recovery is said to be long process and will also impact consumer and labour behaviour  along with the demand and supply chains.

Prominent investors like Lightspeed Venture Partners, Y combator have warned their portfoli companies regarding the future turbulence and investors are looking for companies that can provide near -term certainity as the global investment shifts is toward companies which can show profit in near-term.

Venture firm added,”The era of being awarded for hypergrowth at any cost is quickly coming to an end”.

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