Sources: Sequoia apologized to its fund investors for the $150M lost on its FTX bet and details plans to improve its due diligence process on new investments
but blames bankruptcy filing Sead-Fadilpasic / Cryptonews : Venture Capital Firm Sequoia Apologizes to Fund Investors for $150 Million Loss on FTX Shadine Taufik / Tech in Asia : Sequoia apologizes for investing in FTX Julius Mutunkei / crypto.news : Sequoia Capital apologizes to investors after FTX loss Tweets: Holger Zschaepitz / @schuldensuehner : OUCH! FTX Collapse tarnishes Sequoia's reputation, prompts apology: Top partners at the powerful VC firm apologized to their investors in a conference call Tuesday for backing FTX w/investments totaling $214mln across 2 funds. https://www.bloomberg.com/... https://twitter.com/... Liz Habib / @lizhabib : This is laughable. Sequoia Cap. - lost $150MM in FTX - is telling its fund investors it will improve due diligence. FTX didn't even have an accounting department - HOW DID SEQUOIA MISS THAT? https://www.wsj.com/... Heather Somerville / @heathersomervil : SCOOP from @berber_jin1 — Sequoia Capital Apologizes to Limited Partners for FTX Investment: a very, very rare moment of contrition indeed. https://www.wsj.com/... Dare Obasanjo / @carnage4life : There are 3 types of crypto projects 1. Pump & dumps and pyramid schemes (e.g shitcoins, NFTs, play to earn) 2. Taking advantage of lax regulations (e.g stablecoins, DeFi) 3. Using blockchain when a SQL database would do just fine. Which will survive? https://www.wsj.com/... @scottmelker : Our bad, next time we will actually ask for information before throwing our money at a kid playing video games. https://www.wsj.com/... Berber Jin / @berber_jin1 : SCOOP - In a conference call to LPs, Sequoia apologized for its $150 million loss on FTX and vowed to conduct more thorough due diligence on future investments an extremely rare moment of contrition for the firm More to come in story below: https://www.wsj.com/... Joe Emison / @joeemison : Pretty wild how Sequoia went from, “We do excellent due diligence and FTX was just one of those cases that isn't successful” to apologizing for poor due diligence and saying they would have a Big Four accounting firm review early-state startup financial statements in 10 days. Boring Howard Lindzon / @howardlindzon : I'm hearing that Sequoia has issued an apology to LP's. I approve. I am sure a few of VC's on the Sequioa Penski/FTX file are manning the Russia office now.
Context & Ripple Effects
Sequoia had already written its FTX position down to zero while maintaining that its original review was rigorous. Subsequent coverage identified concrete gaps in that review: Sequoia lacked access to Alameda’s balance sheet and did not demand a board seat.
The apology changes the story from a single failed investment into a limited-partner accountability issue. Its stated plan to strengthen diligence acknowledges that the prior process did not provide sufficient protection against the FTX-related risks identified in the coverage.
First-order effects
- Sequoia’s limited partners receive an apology for the reported $150 million loss and a commitment to change how the firm evaluates new investments.
- New Sequoia investment reviews will face heightened scrutiny after the reported lack of access to Alameda’s balance sheet and board representation in the FTX case.
Second-order effects
- Founders seeking Sequoia capital may have to provide more financial visibility and governance access as the firm applies its revised diligence process.
- Other venture investors backing crypto companies face sharper questions from their own limited partners about access to affiliated entities’ finances and investor oversight.
Third-order effects
- If major venture firms standardize deeper financial and governance checks after FTX, capital for crypto businesses will increasingly depend on meeting institutional-control expectations rather than reputation alone.
- The episode reinforces the backlash to Sequoia’s public association with Bankman-Fried, widening the crypto legitimacy gap between firms that can substantiate controls and those that cannot.
The trend: FTX’s collapse is pushing venture investors to treat governance access and related-party financial visibility as central tests of crypto-investment legitimacy.