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At TechCrunch Disrupt 2025, Sequoia managing partner Roelof Botha argued that the venture industry isn\u2019t an asset class, and that throwing more money into Silicon Valley doesn\u2019t lead to better companies.<\/p>\n
\u201cInvesting in venture is a return-free risk,\u201d Botha said during an interview on TechCrunch\u2019s Disrupt\u2019s main stage on Monday. \u201cAnybody who\u2019s studied the capital asset pricing model understands the joke of that. The reason I came up with this is, if you look at the history of venture capital, it\u2019s an asset that\u2019s uncorrelated with other asset classes.\u201d<\/p>\n
\u201cAnd so the thinking for many allocators was you should allocate a certain percentage of your portfolio to this and more money should flow to venture capital, but the truth is that there are only so many companies that matter,\u201d Botha continued. <\/p>\n
\u201cIn my opinion, throwing more money into Silicon Valley doesn\u2019t yield more great companies. It actually dilutes that, it actually makes it harder for us to get that small number of special companies to flourish,\u201d added Botha.<\/p>\n
Botha noted that there are currently 3,000 venture firms in the United States, while there were just 1,000 when he joined Sequoia 20 years ago.<\/p>\n
\u201cWhen I joined Sequoia 2003 there were no mobile devices,\u201d said Botha \u201cCloud computing didn\u2019t exist. There were maybe 300 million people on the planet that had access to the internet. So the scale of the opportunity today is completely different. If you look technically at the numbers, I think for the last 20 years, there\u2019s roughly been 380 billion-dollar-plus outcomes in the industry,\u201d Botha said (meaning roughly 20 per year).<\/p>\n
\u201cThat\u2019s a significant number, but I don\u2019t think it will continue to scale just with more money going into the industry.\u201d<\/p>\n<\/div>\n