At TechCrunch Disrupt 2025, Sequoia managing companion Roelof Botha argued that the enterprise trade isn’t an asset class, and that throwing more cash into Silicon Valley doesn’t result in higher firms.
“Investing in enterprise is a return-free danger,” Botha stated throughout an interview on TechCrunch’s Disrupt’s major stage on Monday. “Anyone who’s studied the capital asset pricing mannequin understands the joke of that. The explanation I got here up with that is, when you have a look at the historical past of enterprise capital, it’s an asset that’s uncorrelated with different asset courses.”
“And so the considering for a lot of allocators was you need to allocate a sure proportion of your portfolio to this and more cash ought to move to enterprise capital, however the reality is that there are solely so many firms that matter,” Botha continued.
“For my part, throwing more cash into Silicon Valley doesn’t yield extra nice firms. It truly dilutes that, it truly makes it more durable for us to get that small variety of particular firms to flourish,” added Botha.
Botha famous that there are presently 3,000 enterprise companies in the USA, whereas there have been simply 1,000 when he joined Sequoia 20 years in the past.
“After I joined Sequoia 2003 there have been no cell units,” stated Botha “Cloud computing didn’t exist. There have been perhaps 300 million folks on the planet that had entry to the web. So the dimensions of the chance at this time is totally totally different. Should you look technically on the numbers, I feel for the final 20 years, there’s roughly been $380 billion+ outcomes within the trade,” Botha stated.
“That’s a big quantity, however I don’t suppose it’ll proceed to scale simply with more cash going into the trade.”