At TechCrunch Disrupt 2025, Sequoia managing partner Roelof Botha argued that the venture industry is not an asset class. He stated that throwing more money into Silicon Valley does not lead to better companies.
During an interview on the main stage, Botha said that investing in venture is a return-free risk. He explained that anyone familiar with the capital asset pricing model would understand his point. He developed this view by looking at the history of venture capital, which shows it is an asset class uncorrelated with others.
He continued by saying that many allocators believed they should dedicate a certain percentage of their portfolio to venture, expecting more money to flow in. However, the truth is that only a limited number of companies truly matter. In his opinion, increasing the money supply to Silicon Valley does not produce more great companies. Instead, it dilutes the ecosystem and makes it more difficult for that small number of special companies to flourish.
Botha provided some context, noting there are currently 3,000 venture firms in the United States. When he joined Sequoia 20 years ago, there were only 1,000. He reflected on the changes since 2003, a time without mobile devices or cloud computing. Back then, only about 300 million people on the planet had internet access. He emphasized that the scale of the opportunity today is completely different.
Looking at the numbers technically, Botha said that over the last 20 years, the industry has produced roughly 380 billion dollars or more in outcomes. He acknowledged that this is a significant number but expressed his belief that it will not continue to scale simply by putting more money into the industry.