Sequoia Capital marks its FTX funding right down to zero {dollars}

Dear Limited Partner,

We are reaching out to share an replace on our funding in FTX. In current days, a liquidity crunch has created solvency danger for FTX. The full nature and extent of this danger just isn’t identified right now. Based on our present understanding, we’re marking our funding right down to $0.

Sequoia Capital’s publicity to FTX is proscribed. We personal FTX.com and FTX US in a single non-public fund, Global Growth Fund III. FTX just isn’t a prime ten place within the fund, and our $150 million price foundation accounts for lower than 3% of the dedicated capital of the fund. The $150 million loss is offset by ~$7.5B in realized and unrealized beneficial properties in the identical fund, so the fund stays in fine condition.

Separately, SCGE Fund, L.P. invested $63.5M in FTX.com and FTX US, representing lower than 1% of the SCGE Fund’s 9/30/2022 portfolio (at honest worth).

We are within the enterprise of taking danger. Some investments will shock to the upside, and a few will shock to the draw back. We don’t take this accountability calmly and do in depth analysis and thorough diligence on each funding we make. At the time of our funding in FTX, we ran a rigorous diligence course of. In 2021, the yr of our funding, FTX generated roughly $1B in income and greater than $250M in working earnings, as was made public in August 2022.

The present state of affairs is growing shortly. We will talk in a well timed method when extra data is obtainable. If you could have any further questions, please contact Andrew Reynolds, Marie Klemchuk and Kathleen Forte at: [email protected] For SCGE questions, please contact Kimberly Summe at [email protected]

Sincerely.

Team Sequoia

Footnotes:

Global Growth Fund III (GGFIlI) information is as of September 30, 2022 and relies on U.S. GAAP. The $7.5B consists of $5.8B of unrealized achieve and $1.7B of realized achieve. which incorporates the General Partner distribution on May 27, 2021 pursuant to the 2021 Amendment. Past efficiency just isn’t indicative of future outcomes

Global Growth Fund III (GGFIII) refers to Sequoia Capital Global Growth Fund III – Endurance Partners, L.P. and doesn’t embrace Sequoia Capital Global Growth Fund III – U.S./India Annex Fund, L.P., Sequoia Capital Global

Growth Fund III – China Annex Fund, L.P., and their parallel funds