Sequoia Capital, one of Silicon Valley’s oldest venture capital (VC) firms, recently expanded its presence into Europe. After more than three decades of investing exclusively in domestic U.S.-based startup companies, Sequoia has made several investments in European companies, and opened offices in London and Berlin.
This move starkly contrasts the traditional American-focused investment strategies of most prominent VC firms, which raises the question: Why did Sequoia break with that tradition?
In this article we will explore the factors that led to Sequoia’s decision to expand their operations and open up offices in Europe’s thriving startup scene. Next, we will look at how they differentiate themselves from other VC firms by leveraging several key factors, such as local knowledge and expertise; market intelligence provided by partnerships with tech players; access to global capital sources; and building close relationships with European entrepreneurs. Finally, we will discuss how these advantages can help them gain competitive advantage through early-stage investments in promising European startups.
Sequoia’s History
Founded in 1972, VC firm Sequoia has its roots in Silicon Valley, but in 2020 the firm made a daring move, declaring that it would be breaking tradition to establish a presence in Europe’s startup scene.
This shift has been met with excitement and trepidation, as it threatens to shake up the landscape of venture capital in the region.
Let’s look at the history of Sequoia and how this decision came to be.
The Firm’s Early Years
Sequoia is a venture capital firm founded in 1972 by Don Valentine. The firm became one of Silicon Valley’s best-known venture firms after investing in such companies as Apple, Oracle, and Cisco. However, Valentine believes that staying true to his core principles:
- Investing in companies with the potential to become billion-dollar plus businesses.
- Taking active roles in helping entrepreneurs bring their visions to life.
- Building networks with other investors, has been key to the firm’s success.
This focus on helping to shape innovative business models set the stage for Sequoia’s entry into Europe’s tech-startup space. These values—long lasting investments and helping entrepreneurs succeed—continue to guide Sequoia today.
Sequoia’s first European office opened its doors in London in 2006. At first, the team of four general partners focused solely on UK-based investments; however, by 2012 there was a noticeable shift towards other European countries. Since then, Sequoia has expanded its Europe presence by opening offices across the continent (Germany, Spain France, Ireland and more). With investments across various industries ranging from artificial intelligence (AI), fintech (financial technology), ecommerce and software development—Sequoia continues its mission of backing bold innovations that have long lasting impact worldwide.
Why VC Firm Sequoia Broke With Tradition To Put Down Roots In Europe’s Startup Scene
Founded in 1972, Sequoia Capital is one of the oldest venture capital (VC) firms in the United States. The firm’s goal has always been to seek out and invest in exceptional companies, whether based in India, Israel or California. In their almost 50 year history, Sequoia is widely known for investing early-stage tech startups such as Apple Inc., Google, LinkedIn and WhatsApp—all of which have gone on to achieve immense success.
In 2009, Sequoia set its sights on global expansion with a move into China and has since been investing throughout Asia including countries such as Singapore and India. Now the VC firm continues its non-traditional approach to venture by setting up its first European office in London—marking the fourth parent office to open outside of Silicon Valley after Shanghai, Beijing, and Hong Kong.
Sequoia’s European team consists of tech veterans who have had decades of experience leading investments in the region’s top startups such as Deliveroo, Coinbase UK Ltd., Red Badger Technologies Ltd., Secret Escapes Ltd., Parkbob Ltd., Codacy Inc., Currencies Direct Ltd., Viola Fintech Ltd., Lendinvest Microfinance Ltd., Adbrain Plc and Yooyi TvVeenValue Llp. As Europe has become home to some of the world’s top technological advances such as artificial intelligence (AI), machine learning (ML), autonomous vehicles (AV) and robotics—Sequoia Europe is seeking out a diverse range of startups across multiple sectors that can lead innovation in this space.
Sequoia’s Impact On European Startups
Sequoia’s growing presence in the European startup ecosystem has significantly impacted the development and growth of startups in the region. Since entering the European tech scene, Sequoia has invested in and supported many inspiring companies and entrepreneurs who have since become major players in the European tech industry.
Let’s look closer at Sequoia’s presence in the European market and how it is changing the European startup landscape.
Early Investments
Sequoia entered the European market early on with investments in Supercell, a mobile game company based in Helsinki. The company had a strong market presence and Sequoia was eager to invest. Other early investments included Alexanders Angels, Criteo, and Unity Technologies; all well established tech companies.
Sequoia went beyond just investing money in these organizations; they became an active partner. They actively developed businesses like Supercell and Unity Technologies, providing project management tools and organizational advice and offering crucial connections to other businesses in the industry. These relationships quickly developed into long term connections between Sequoia and their invested organizations which helped create a loyal customer base that would recommend the VC firm to others within their industry.
The success of these early investments solidified Sequoia’s presence in Europe’s startup scene; they were able to use the successes of their portfolio companies to bolster their reputation among potential investors and future partners. What began as a simple investment fund quickly became one of the most premier venture capital firms on the continent with a wide variety of portfolio companies from multiple industries such as fintech, software, data security, healthcare, energy, automotive and more.
Successful Exits
Since putting down roots in Europe, Sequoia has made several successful exits that have brought a return on investment to its portfolio companies. These include Songkick, Funding Circle and TransferWise, which have all gone on to become public companies or be sold for large sums of money. By investing early, nurturing the growth of these businesses and providing the best resources and knowledge in their respective industries, Sequoia has enabled their portfolio companies to build strong foundations that eventually create successful long-term returns.
Moreover, the presence of large VC firms in Europe’s startup scene has smoothed the way for promising new startups to access capital from large funds worldwide—which was extremely difficult even just a few years ago. Furthermore, this support from established venture capitalist firms has also made it easier for European startups to start working with larger corporate customers outside Europe—immensely helping them grow globally. Finally, this added confidence derived from the structured guidance and financial resources provided by VC firm such as Sequoia has helped pave the way for thousands of European tech entrepreneurs.
Sequoia’s European Strategy
The Silicon Valley-based venture capital firm, Sequoia, has surprised the venture capital world with its ambitious foray into Europe’s startup scene. With its European-based teams in London and Berlin, Sequoia is taking a different route than the traditional VC investing model in Silicon Valley-based startups.
Let’s look closer at Sequoia’s European strategy and why it is breaking the mould.
Investing In Early-Stage Startups
Sequoia’s European strategy centers around investing in early-stage startups. To do this, the firm has recruited teams of experienced venture capitalists and entrepreneurs across Europe. Sequoia also taps into its industry connections by allowing alumni entrepreneurs to mentor and support new entrepreneurs, a strategy has proven fruitful for Sequoia over the years.
Most importantly, Sequoia is defined by its commitment to early-stage startups. Typically, venture capital firms are hesitant with investing in these types of companies; they favor proven track records and predictable returns on their investments. But Sequoia has broken away from that tradition, identifying potential business opportunities in more than just the traditional “unicorn” companies that many venture capital firms traditionally invest in.
Sequoia stands out among its competitors by emphasizing developing relationships with entrepreneurs early on before making an investment decision. The process requires new partners to seek founders who integrate well with the firm’s core values and beliefs: think long-term strategies, unique ways of attacking problems, agile leaders and exceptional execution abilities. This process allows a focused approach to delivering results for investors even if it takes up time resources along the way — a testament to Sequoia’s commitment to nurturing successful businesses over making quick gains with their investments.
Focusing On Network Effects
The venture capital (VC) firm Sequoia has made a remarkable entry into the European market. Part of their success is due to their strategy, which focuses on creating network effects. They have identified companies that are ripe for scaling, giving them the greatest chance of success moving forward.
Network effects are when a product or service gains more value as more people use it. This can be achieved in many ways – such as by providing incentives and discounts for customers who purchase bigger quantities or recommend their product to others. The advantages are many: it helps build an ecosystem around the company’s services and products, gives them an edge against rivals that don’t offer similar incentives, and most importantly creates stickiness around the overall service or product offering.
Sequoia has been able to capitalize on this strategy by investing in businesses specifically focused on creating this “platform-driven” atmosphere – where customers come first and no two products or services are exactly alike. This means they invest in companies with precise strategies that drive customer engagement and encourage communities to form around them; one example being online grocery delivery services like Ocado which use loyalty programs to keep customers coming back time again. Sequoia has also worked with innovative firms such as Deliveroo and Repositive – whose data platforms solve problems of access and scale when delivering medical samples (among other things).
By recognizing these opportunities early on they have already seen great success in Europe through these network effects centric investments with standout companies claiming large exits such as Azimo (acquired by TransferWise) and Home24 (acquired by Otto).
Building Long-Term Relationships
Sequoia’s strategy of building long-term relationships with founders in the European startup scene has allowed the venture capital firm to expand its influence and presence in Europe. In addition, it has connected the Silicon Valley firm to entrepreneurs both at an early and later stages of their startup journeys, something it previously lacked when focusing primarily on opportunities in its home base of California.
The VC firm’s strategy has been focused on providing resources and support to entrepreneurs, which has helped them navigate an increasingly crowded market full of angels, other VCs, debt capital providers and even corporate venture units looking for ideas or deals. Sequoia is taking a holistic approach to developing partnerships with entrepreneurs, leveraging their close networks of existing founders ready to help out their European peers and a range of money-savvy advisors within their home markets.
Additionally, the firm is looking beyond financial capital by offering mentorship programs tailored specifically to European startups, advisory services such as legal counseling, and introductions to potential customers and partners in other markets. By taking this muliti-faceted approach, Sequoia is uniquely positioned to be one of the most sought after investors for European entrepreneurs navigating an increasingly international world.
Conclusion
Sequoia’s move to Europe shows that the traditional venture capital model is breaking down. More and more investors now recognize that startups can succeed outside Silicon Valley. As a result, larger firms like Sequoia are now taking notice and investing in these regions.
This has greatly impacted the European startup scene, as there are now more resources available for entrepreneurs to get their businesses off the ground. This in turn gives them access to more funding, advice and mentorship which further helps to drive innovation and job growth in Europe.
Sequoia’s entrance into Europe is another example of how venture capital is evolving along with the times. It serves as a sign of optimism for European startups and a reminder of how quickly trends can change in an ever-evolving industry like VC.