During the TechCrunch Disrupt 2025 conference, Sequoia managing partner Roelof Botha argued that the enterprise capital industry is not an asset class and that throwing more cash into Silicon Valley does not lead to raised corporations.
“Investing in a venture involves risk with no return,” Botha said during an interview Monday on the TechCrunch Disrupt primary stage. “Anyone who has studied the capital asset pricing model understands this joke. The reason I came up with this is because if you look at the history of venture capital, it is an asset that is uncorrelated to other asset classes.”
“So a lot of allocators thought that you should allocate a certain percentage of your portfolio to this and more money should flow into venture capital, but the truth is that only a certain number of companies matter,” Botha continued.
“In my opinion, throwing more money into Silicon Valley does not produce more great companies. In fact, it weakens, in fact makes it harder for us to grow such a small number of special companies,” Botha added.
Botha noted that there are now 3,000 enterprise capital firms in the United States, whereas when he joined Sequoia 20 years ago, there have been only one,000.
“When I joined Sequoia 2003, there were no mobile devices,” Botha said. “Cloud computing didn’t exist. Maybe 300 million people in the world had access to the Internet. So the scale of opportunity today is completely different. If you look at the numbers from a technical perspective, I think the industry has made about $380 billion over the last 20 years,” Botha said.
“It’s a significant number, but I don’t think it will continue to grow as more money flows into the industry.”