Sequoia Capital’s Roelof Botha was ousted by top lieutenants who lost confidence in his ability to keep Silicon Valley’s most powerful venture capital firm ahead of rivals.
Botha stepped down as managing partner of the group on Tuesday following an intervention from Alfred Lin, Pat Grady and Andrew Reed, said multiple people with knowledge of the matter.
The trio of senior partners had the blessing of the wider firm and Doug Leone, Sequoia’s former managing partner, said three of the people.
Their move came on the back of concerns about Botha’s management style, questions about Sequoia’s artificial intelligence investment strategy and follows high-profile clashes between senior figures at the firm, said the people.
The Financial Times spoke to 10 people close to the firm, including investors who have worked with Botha and the institutions that bankroll Sequoia, known as limited partners. His ousting was motivated by a belief that a new generation of leaders would better serve Sequoia’s LPs, they said.
One of those described the removal as a “revolt” against Botha’s “imperial style of leadership”, following a period of upheaval at one of Silicon Valley’s most successful and enduring firms.
“On an IQ level he is off the charts . . . But the heart of the matter is that Roelof is one of these people who always needs to be seen as the smartest guy in the room,” the person said, adding Botha’s emotional intelligence did not match his intellect.
“Roelof is a legendary investor, leader and human being,” Sequoia’s new leadership team told the FT. “He was part of the decision to empower the next generation, and he will continue to serve on boards and advise the partnership, alongside former stewards Doug [Leone] and Jim [Goetz].”
The trio of lieutenants took advantage of Sequoia’s unique governance, which allows partners to call a vote in the leadership at any point, said two people with knowledge of the arrangement.
The measure gives additional weighting to the longer-serving investors and is designed to prevent senior partners blocking the ascent of dealmakers beneath them, they added.
“The reason Sequoia has stayed Sequoia for 53 years is they have refused to cement themselves in hierarchy,” said one person with knowledge of Botha’s removal.
Grady and Lin will now run the firm, while Reed and Grady will co-lead Sequoia’s fund investing in more mature start-ups. Lin and another partner, Luciana Lixandru, will co-lead the firm’s early stage investment fund.
Botha, who has run its US and European business since 2017 and took over the whole firm in 2022, will remain as an adviser.
The 52-year old grandson of Roelof “Pik” Botha, the last foreign secretary under South Africa’s apartheid regime and later a member of Nelson Mandela’s first government, was hired to PayPal by Elon Musk early in his career.
He has led a string of investments, including in Instagram, YouTube and $30bn database management company MongoDB. Sequoia has returned more than $50bn to its US and European investors since 2017, said a person with knowledge of the matter.
Despite these successes, partners decided Lin, who has backed Airbnb, DoorDash and OpenAI, and Grady, behind investments in Snowflake, Zoom and ServiceNow, were better placed to lead Sequoia forward.
Under Botha, Sequoia has taken a more cautious approach to AI investment than some rivals. The firm invested a little more than $20mn in OpenAI in 2021, when the ChatGPT maker was valued at about $20bn, and has boosted that stake in subsequent rounds, said people with knowledge of the deals.
When OpenAI raised funds at a $260bn valuation earlier this year, Sequoia offered to invest $1bn, but ultimately was given a stake of a fraction of that, according to people with knowledge of that deal.
Sequoia also holds a stake in Musk’s xAI, but has focused on early investments in AI application companies such as Harvey, Sierra and Glean — an approach also advocated by Grady.
Botha also grappled with major conflicts during his tenure. Last month, the FT reported Sequoia’s chief operating officer Sumaiya Balbale left the firm in August after complaining that colleague Shaun Maguire’s X posts about New York’s mayor-elect Zohran Mamdani were Islamophobic.
Botha reminded Maguire — a vital Musk ally — of the need to consider Sequoia’s reputation, but otherwise refused to discipline him, citing the firm’s long-standing position that all partners had a right to free speech. Balbale left after considering her position untenable, according to those with knowledge of the incident.
Last year, a fight over board seats at Swedish fintech Klarna exposed a schism between Botha and Michael Moritz, who had previously led the firm and backed some of its most successful companies.
Botha threw his weight behind an effort to vote Moritz out as Klarna chair, said people familiar with the situation. The effort backfired, with Moritz remaining in post and Sequoia’s Matthew Miller being ousted as a Klarna director instead.
Early in his tenure, Botha also split from Sequoia’s lucrative Chinese business. Geopolitical pressure gave the firm little choice, but the decision nonetheless impacted returns.
“I do think the last five years have been super intense, it’s really hard to lead a firm through all of that,” said one long-standing Sequoia LP.
Botha was also hurt by other strategic decisions of his own, said multiple people with knowledge of the matter.
This included the announcement, as Leone was handing over the reins, of a new “evergreen” fund to hold on to Sequoia’s best companies after they went public, a point at which VCs typically cash out.
The timing was disastrous: the fund was launched at the peak of a tech investment boom in 2022 and the valuations of start-ups which Sequoia had clung on to cratered.
Public market valuations have since rebounded, and the fund has generated nearly $7bn in gains on where the companies were priced when they were rolled in, according to a person with knowledge of Sequoia’s financials. But the decision angered some LPs who were given little option but to participate in the new fund, said people familiar with the matter.
“The evergreen structure came at the wrong time, they put a lot of strain on LPs and didn’t return money at the top of the market,” said a Silicon Valley VC.
It is unclear if Lin and Grady intend to move the firm in a new direction. The pair are “very warm, very capable and clever”, said the long-standing Sequoia LP, adding they are also “sitting on a very hot seat”.
Additional reporting by Stephen Morris in San Francisco