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In 1933, Don Valentine was born to a humble family in Yonkers, New York. |
His dad was a delivery truck driver and neither of his parents finished elementary school. |
The Valentine family was Catholic and hustled to make sure that Don was able to attend private Catholic schools as a youth. |
He graduated from Fordham University in the '50's before joining the army. The Korean War was taking place at that time. |
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After the military stint, Don worked for a handful of companies including Sylvania Electric, a vacuum tube company based in Pennsylvania, and Raytheon, a defense tech company based in Los Angeles. |
But it was at Fairchild Semiconductor that things took a wild turn. |
If Don Valentine and Fairchild sound familiar, you probably read Heart of Silicon by AK. |
At Fairchild Semiconductor, Don: |
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It's important to put this in context; at the time, $150M in sales = roughly $1.7B today. Don's leverage at Fairchild was second to none. |
His attention started to turn towards incubating companies in-house, because technology had hit an inflection point and semiconductors were in high demand. Valentine went to the board of Camera and Instrument Corporation, Fairchild's parent company, and described his vision of building a comprehensive ecosystem around their existing semiconductor products. |
The board laughed. |
Don decided to do it himself. |
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 | nah fr |
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Valentine's only constraint was capital - he simply did not have enough cash on hand to fund the startups building semiconductors. A semiconductor startup required an average of $2M to get off the ground. Nonetheless, he begins to dabble as an angel investor, writing smaller checks and providing advice to companies innovating with silicon transistors and semiconductors. |
In the middle of Valentine's foray into angel investing, Fairchild got acquired by National Semiconductor, a public company. Charles Spock, a Fairchild executive, got tapped to lead National as the CEO. |
Charles hated public speaking. |
So he asked Don to lead earnings calls for him. |
This is how Don built a relationship with Capital Group, a large institutional investor. |
Capital Group is still one of the largest asset managers today, with $2.6T AUM |
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 | and from this seed, a sequoia slowly sprouted |
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Capital Group was starting to get into technology companies with investments into AMD, National, and a handful of others. Valentine seemed extremely knowledgeable about early stage tech investing, and after a while, Capital Group approached him with an offer: leave National Semiconductor and come do private tech investing at Capital. |
It was a no-brainer for Don. |
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I had a sense that my system of selection would work far more than it wouldn't, but I didn't have the resources personally to play Texas Hold'em and put up more chips. The opportunity to have a large discretionary pool of money to continue to support the investment ideas was the difference between the environment I was in and the environment I was interested in going to. | | | | Don Valentine |
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In 1972, Don joined Capital Group to launch a $5M fund for Capital Group investors who wanted exposure to the semiconductor startups in Northern California. |
The fund was called The Sequoia Fund. |
Why did they name it after a tree? |
Sequoias: |
are native to Northern California have incredible longevity and can live up to 3,000 years can grow as tall as a 26 story building resist all decaying force, from fungal rot to forest fires
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 | shaded under a |
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The Sequoia Fund was one of the first modern venture funds where a venture capitalist takes money from an institutional investor to earn superior returns to public equities and bonds. |
While Don was working under the Capital Group umbrella, he realized he needed to create his own firm to fully capitalize on the opportunity at hand. |
So he created Sequoia Capital and hit the road to raise an initial fund. |
One of his fundraising highlights came when he made a pit stop in New York City to pitch Salomon Brothers. |
Salomon Brothers was a premier American investment bank at the time. |
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SALOMON EXEC: I see that you didn't go to Harvard Business School |
DON: Right, I didn't go to Harvard Business School, I went to Fairchild Semiconductor business school. |
SALOMON EXEC: We're not going to invest with anyone who didn't go to Harvard Business School. |
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Raising Sequoia Capital's first fund took Don Valentine three years… |
He raised $5M. |
Sequoia Capital's first investment was into Atari. Don had known the founder for some time and planned on investing once the fund closed on capital. In 1975, he invested $600,000 and a year later, Atari got acquired by Warner Communication and Sequoia gets $2,400,000 to distribute to its limited partners. |
The next big winner investment was Apple. In 1977, the iconic technology firm raised $500,000 in their first venture capital round, and Sequoia signed up for $150,000. Just two years later, Don sells the $150,000 investment at a 40x mark-up ($6M) right before the IPO. Excellent returns, but, well, we know what Apple would become. Valentine would never forget the mistake of selling too early. |
Even today, Sequoia now holds companies that go public much longer than the average venture capital firm. Additionally, they began almost exclusively taking money from nonprofits who are tax exempt and don't have short term liquidity needs, in contrast to large corporations and individuals who made up the first fund. |
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Since it's founding in 1972, Sequoia has helped to capitalize companies that now represent $10 trillion in market cap value. |
For context, the entire Dow Jones is $20 trillion. |
Sequoia now has nearly $60B AUM and a brand that transcends the confines of venture capital. |
Here are some of the most notable Sequoia investments: |
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It hasn't been all green pastures, however. In 2021-2023 the firm experienced the same hangover from an excess of venture capital funding that other venture firms experienced. Roelof Botha became managing partner in 2022, taking over from Doug Leone. The Botha administration honed in on initiatives that Doug Leone and Michael Moritz had already put into motion. |
The most interesting initiative is by far "The Sequoia Fund". |
The Sequoia Fund pays homage to the original Capital Group fund that Valentine ran before launching Sequoia Capital. |
It was established in 2021 as a response to the frustration that limited partners were feeling. The fund is open-ended, rather than closed-ended, with an evergreen structure, and it holds all of the firm's private and public investments. The Sequoia Fund is now the sole limited partner for all of Sequoia's future funds, meaning that limited partners have to go through The Sequoia Fund to get access to any sub-funds in the Sequoia Capital ecosystem. |
This move had a couple of key implications: |
Sequoia can hold on to public portfolio companies for much longer. Remember how Valentine was sick because of the missed Apple gains? Now, LPs can decide to exit their Sequoia Fund stakes on their own, which means Sequoia can stay in any given public company longer than an LP might be comfortable with. Limited partners have more control… to some degree. As mentioned above, LPs will keep accounts with The Sequoia Fund, rather than the closed-end sub funds. There are annual redemption rights and LPs are able to make allocation requests to specific sub funds. Modified incentives in the absence of time constraints. Venture capital firms are usually restricted by the 10-year closed fund life-cycle, and they make decisions accordingly so that they can return capital to limited partners, and then go back to market, raising from said limited partners. Without the time crunch, Sequoia is theoretically able to be a much longer term capital partner to entrepreneurs and potentially capture billions of dollars in the market value creation that happens decades after companies go public.
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Sounds like everyone's trying to be Berkshire nowadays. |
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We think the VC model is outdated. It creates an odd dynamic between us and founders, where on the eve of an IPO they're asking if we're going to have to get off their boards and quickly distribute the stock. Why should that be the default, particularly when so much value creation happens later? | | | | Roelof Botha, managing partner at Sequoia. |
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Headlines |
Waymo will launch Washington D.C. robotaxi service in 2026. CNBC Outreach founder Manny Medina has a new startup that helps AI agents get paid. Techcrunch Netflix passes on NFL rights. FOS KKR founders want to become a mini-Berkshire. Bloomberg
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