Venture Capital Is Not an Asset Class, Says Sequoia’s Roelof Botha

Why It Matters

The remarks challenge the common practice of allocating a fixed portfolio slice to VC for diversification, suggesting that excess funding could degrade startup quality and limit returns, which may prompt institutional investors to rethink capital deployment in early‑stage tech.

Summary

At TechCrunch Disrupt 2025, Sequoia managing partner Roelof Botha argued that venture capital should not be treated as an asset class, noting that VC returns are essentially uncorrelated and represent a “return‑free risk.” He pointed out that the number of U.S. venture firms has risen from about 1,000 twenty years ago to roughly 3,000 today, yet the industry has produced only about $380 billion in outcomes—around 20 major exits per year—over that period. Botha warned that injecting more capital into Silicon Valley dilutes the pool of truly exceptional companies and will not sustain scaling, despite the dramatic expansion of mobile and cloud opportunities. He concluded that simply adding money will not generate more great companies.