Bellwether venture capital firm Sequoia let go of seven employees on its operations team last Friday.
The decision impacted about one-third of the firm’s talent staff, which helps with recruiting functions for startups in its portfolio, Sequoia’s chief operating officer Sumaiya Balbale confirmed to Forbes. It follows the April departure of 12-year veteran Jaime Bott, who led the talent team.
Two sources said the layoffs reflect a retrenching by venture capitalists after the industry’s bull run that ended in early 2022. Sequoia is not alone in dialing back prior expansions as the market downturn continues. Earlier this year, Y Combinator laid off 17 employees, shuttering its late-stage startup fund. The cutbacks mirror those at VC-backed startups which are now resorting to layoffs to sustain their businesses as funding dries up.
“Especially during the peak years of 2021 and 2022, the talent needs of our portfolio tripled,” Balbale told Forbes, noting that Sequoia doubled its talent support during this period. But once startup hiring began to freeze, a correction became inevitable. “As the market corrected, there was a pause and the number of inbound requests and hiring needs that our companies were asking of us decreased,” Balbale said.
Such moves should not come as a surprise, said Jordan Ormont, talent partner at Menlo Ventures. “Firms over-hired during the boom of recent years, and now are looking to course-correct,” he said. (Not every firm: Menlo is still “adding intentionally” to its own talent and business development team, Ormont added.)
Balbale described Friday’s cuts as part of a broader “restructuring” of the firm two years in the making to move away from “support on a one-on-one level to something that could be delivered to more founders simultaneously.” Examples include its Arc program for seed-stage startups and Builders, a network of operators which provide advice to founders, she said.
Historically, Balbale said, Sequoia has taken an “agency-based approach” — scaling up its talent-focused employee count to meet the needs of its founders. The new model is intended to allow Sequoia to “deliver more support in a scalable way, whether it’s a peak or non-peak moment.”
Sequoia is undergoing a period of turbulent change after Roelof Botha took over the reins last year from longtime steward Doug Leone. The firm lowered management fees for limited partners on its new investment vehicles, partner Alfred Lin said at an industry event in January. In March, it gave LPs the opportunity to withdraw money early from its evergreen fund, which Sequoia launched in late 2021 so that it could hold public stocks longer than a traditional venture capital firm, according to The Information.
In June, Sequoia China and Sequoia India split off to become separate firms amid geopolitical pressure, as first reported in Forbes. Last week, The Information reported that five partners had left the firm in recent months, including Moritz and two crypto investors. Those departures were not related to the latest talent team layoffs, Balbale said: “All of the changes that were reported have happened under different circumstances over different periods of time.”
Asked if Sequoia expects to make more broad team-based cuts, Sumaiya said, “No, we have nothing planned.”
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