Source: investors in at least two mature Sequoia funds will see 11X returns on paper, after fees, and another fund is showing 8X returns
About a week before the coronavirus was declared a pandemic, one of the world's leading venture capital firms issued a dire prophecy.
Context & Ripple Effects
These multiples land mid-arc in Sequoia's expansion decade: the firm had been scaling its vehicles since the $12B+ raise across seven funds in 2018, and per the report's own framing the news broke about a week after the firm issued a dire prophecy to founders — just before the coronavirus was declared a pandemic.
What makes the 11X and 8X figures analytically interesting is what sits behind them: Sequoia's later disclosures show performance built on marks rather than realizations — its 2020 flagship fund was marked up 24.6% with no exits — while its evergreen fund kept growing through the VC slowdown, reaching $19.6B.
First-order effects
- Limited partners in at least two mature Sequoia funds are sitting on 11X paper gains after fees, with another fund at 8X — wealth that exists only as valuations until exits convert it to cash.
- The report hands Sequoia's fundraising team its strongest possible evidence material at exactly the moment the firm's scale-up strategy, launched with the 2018 multi-fund raise, needs LP confidence.
Second-order effects
- Paper performance becomes Sequoia's fundraising currency: the same mark-driven track record precedes both the evergreen fund's growth to $19.6B and the ~$7B fund raised under new leadership — the first test of whether LPs follow the numbers past a leadership change.
- LPs benchmarking every manager against post-fee double-digit multiples pressure rival firms either to defend their own marks or cede allocation share to Sequoia, whose evergreen Sequoia Fund structure lets it hold winners longer than fixed-life vehicles can.
Third-order effects
- If unrealized marks keep substituting for realized exits as the proof of a franchise's quality, LP capital concentrates further in the handful of firms able to sustain high paper multiples across cycles — a structural advantage the evergreen vehicle formalizes.
- Performance quoted after fees on paper sets a template for how venture success is judged industry-wide, shifting the scoreboard from cash returned to valuations carried — with the risk that a mark correction hits reputation and fundraising simultaneously.
The trend: Top-tier venture franchises are converting sustained paper marks into ever-larger pools of committed capital, concentrating LP money in firms that can show post-fee multiples without waiting for exits.