One of Sequoia’s most prominent investors, managing partner Roelof Botha, sees signs of another cycle of greed he creates in entrepreneurship capital, one where less sophisticated investors are likely to be hurt.
He posted a warning on Thursday, writing, “We are destined to repeat the mistakes of the past! SPVs are making a return, where the main investor speaks of less than 10% of capital, but eagerly lists the latest set of tourist pieces that think that history will end otherwise.”
That last cycle ended badly. In 2022, the Overheat VC market of 2021 crashed. Fallout is still ongoing, with 2025 expected to be another brutal year of failed beginnings.
Botha is specifically warning of special -purpose vehicles (SPV) – a structure that allows the investor of a start to sell access to some of their shares to others. But new investors are actually not buying shares at first; They are buying SPV shares, often at a lot of inflated prices. This means that the starting rating should only fly for some of the SPV owners to break even.
SPVs are becoming particularly common in investment, where some startups are increasing astronomical amounts. A SEC records find at least nine SPVs related to anthropiku since 2024. The company is reported to have been in talks to raise another $ 3.5 billion.
Figure’s attempt to raise $ 1.5 billion is also reported with SPV, according to information. Note that no company is in the Sequoia portfolio.
The trend is not limited to just a few companies. Almost every major multi-millionaire company has investors offering SPV. And if a VC firm with a big name-we say, the archive of Sequoia Andreessen Horowitz-is running the deal, that name can only seduce the buyers.
A person involved in the secondary markets describes the SPV-charged deals like this: “They are crossing the hat in all agreements that cannot find plenty of QV investors and the name firm puts on a very small and these stupid family offices say Oh,” Andreessen is leading should be good, “although we know that these are not the worst of their companies.”
Botha message to these potential investors? “Don’t buy it.”
Sequoia did not immediately respond to a request for further comment.
