At TechCrunch Disrupt 2025, Sequoia managing partner Roelof Botha argued that the venture industry is not an asset class and that pouring more money into Silicon Valley won't create better companies.
“Investing in ventures is a risk with no return,” Botha said in an interview on the main stage at TechCrunch's Disrupt on Monday. “If you've ever studied capital asset pricing models, you know the joke. The reason I came up with this is because if you look at the history of venture capital, venture capital is an asset that is uncorrelated with other asset classes.”
“So the thinking of many investors was that they should allocate a certain percentage of their portfolio to this and more money should flow into venture capital, but the truth is that only a limited number of companies matter,” Botha continued.
“In my opinion, throwing more money into Silicon Valley doesn't create more great companies; it actually dilutes it and actually makes it harder for a few special companies to thrive,” Botha added.
Botha pointed out that while there are currently 3,000 venture companies in the United States, there were only 1,000 when he joined Sequoia 20 years ago.
“When I joined Sequoia 2003, there were no mobile devices. There was no cloud computing. There were probably 300 million people on the planet who had access to the Internet. So the scale of the opportunity today is completely different. If you look at the numbers technically, I think over the last 20 years, the industry has done about $380 billion or more,” Botha said.
“That's a significant number, but I don't think it's going to continue to grow just because of the influx of money into the industry.”