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 does not lead to better companies.
“Investing in the project is risk-free with no return,” Botha said during an interview on TechCrunch’s Disrupt main stage on Monday. “Anyone who has studied the capital asset pricing model understands the joke of that. The reason I came up with this is, if you look at the history of venture capital, it is an asset that is uncorrelated with other asset classes.”
“And so the thinking of many distributors is that you should allocate a certain percentage of your portfolio to this and more money should flow into venture capital, but the reality is that there are only a few companies that matter,” Botha continued.
“In my opinion, pumping more money into Silicon Valley doesn’t lead to more great companies,” Botha added. “It actually dilutes that, and makes it harder for us to make this small number of private companies thrive.”
Botha pointed out that there are currently 3,000 investment companies in the United States, while there were only 1,000 companies when he joined Sequoia 20 years ago.
“When I joined Sequoia in 2003, there were no mobile devices, cloud computing didn’t exist. There were probably 300 million people on the planet who had access to the Internet. So the size of the opportunity today is completely different. If you look technically at the numbers, I think over the last 20 years, there’s been approximately $380 billion-plus in this industry,” Botha said.
“That’s a big number, but I don’t think it will continue to expand once more money is pumped into the industry.”