Metrics for Sequoia Capital

Goals

To research the following metrics of Sequoia Capital, a venture capital firm, including source data, and how the metric is calculated.
  • Average internal rate of return (IRR)
  • Average Exit Period - from incorporation to exit
  • Average Failure Rate
  • Average Exit Multiple

Early Findings

Data Availability

Initial searches indicate that Sequoia Capital has not published information regarding its IRR, average exit period (from incorporation to exit), average failure rate, and average exit multiple; however, reports with expert opinions and industry benchmarks on the same are available. Thus, they have been included as a proxy for Sequoia Capital.

Sequoia Capital IRR

  • In December 2020, Bloomberg reported that Sequoia Capital was “posting 11-fold returns.”
  • Performance data reviewed by Bloomberg experts showed that Sequoia investors in at least two mature funds would gain “11-fold returns on paper, after fees,” while a third fund would gain eight-fold returns.
  • Venture XIII of 2010 was expected to post 11.1-fold returns. The 2006 Venture XII reported 10.9-fold returns, and the 2003 Venture XI fund led by LinkedIn and YouTube posted eight-fold returns.
  • An analysis report by Cambridge Associates regarding pooled return for U.S. venture capital by fund vintage year net to limited partners showed that the industry pooled IRR for the most recent years 2016, 2017, and 2018 was 24.05%, 25.20%, and 10.91%, respectively.

Summary

  • The first hour of research uncovered data by Bloomberg indicating that Sequoia Capital funds are seeing up to 11-fold returns. While this information came from a legitimate and an authoritative business & finance publisher, a representative for Sequoia Capital declined to comment on the figures.
  • Since Sequoia Capital is a U.S.-based company, the U.S. geographic scope was adopted for this research.
  • To complete Sequoia Capital’s remaining data sets, i.e., its “average exit period — from incorporation to exit; average failure rate; and average exit multiple;” industry data will be adopted as a proxy, since data specific to Sequoia Capital appears limited in the public domain, but can be found at paywalled resources like Crunchbase.
  • Details of our proposed next steps are included in our proposals below. Please select one or more proposals from those provided.

Research proposal:

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