Sequoia to consolidate fund strategy

Sequoia Capital is holding its next annual limited partner meeting in China in an effort to emphasize the Silicon Valley-based firm’s global reach, which will include a planned consolidation of its various funds into a single vehicle.

That means LPs should not expect another fund-raising drive for Sequoia Capital China. Or Sequoia Capital Israel. Or Sequoia Capital India. Or Sequoia Capital Growth.

Just Sequoia Capital XIII, which will include all of the above in addition to its traditional early stage investments in U.S.-based technology companies.

It remains unclear at the moment now how LPs will react, which may determine whether or not Sequoia follows through.

On the one hand, a worldwide fund means less commitment decisions and, perhaps, better geographic synergy opportunities for portfolio companies. On the other hand, many LPs use “bucket” strategies, which makes laser-focused funds more palatable than catch-all funds.

In addition, breaking out the funds allows to withhold from making commitments to an undesirable team or fund, without withdrawing on other Sequoia-run funds.

On the plus side, Sequoia can lower costs thanks to back-end simplification and achieve better front-end integration.

The risk is that the different teams may eventually butt heads, especially if one geographic location achieves strong returns and grows weary of sharing carry with a weaker office. —Dan Primack