End of an era as Moritz steps away from Sequoia

"Sequoia Capital wouldn't be what it is today without Michael," Roelof Botha, who leads Sequoia, wrote to limited partners in a letter viewed by Venture Capital Journal.

Michael Moritz, one of the most successful venture capitalists in history, is stepping down as a partner at Sequoia Capital after nearly 38 years and will focus his energy on its wealth management business, according to a letter to limited partners viewed by Venture Capital Journal.

The bombshell news comes just a month after Sequoia surprised its LPs by announcing that it would split into three separate firms serving China, India/Southeast Asia and the US/Europe.

Michael Moritz

“We are writing to inform you that Michael Moritz will leave Sequoia Capital after nearly 38 years with the partnership, effective July 19, 2023,” reads the letter. “We are immensely grateful for all of Michael’s contributions. He helped establish Sequoia as one of the leading technology investment groups in the world, both as a leader of the firm for two decades and through his representation of the partnerships in companies like Yahoo!, PayPal, Google, Zappos, Instacart, Stripe and Klarna, to name a few.”

The letter goes on to say, “Michael relinquished day-to-day management of Sequoia more than a decade ago, but, since then, has provided support and counsel to the partnership.”

Roelof Botha, who leads Sequoia, signed the letter “on behalf of Team Sequoia.” He writes: “Sequoia Capital wouldn’t be what it is today without Michael. More personally, he shaped my career, taking a chance on me as CFO of PayPal and then recruiting me to Sequoia in 2003. He has been, and will continue to be, a mentor and an inspiration to me and countless others.”

Neither Moritz nor Sequoia responded to messages seeking comment or released an official statement as of press time.

In addition to Moritz’s move, The Information reported that four other Sequoia partners have left the firm, citing “two people with direct knowledge of the matter.” The other partners that have exited are seed/early-stage investors Mike Vernal and Daniel Chen and growth investors Michelle Fradin and Kais Khimji, The Information said. Chen is no longer listed on Sequoia’s website, but the three others remain on the team page.

Of the four, Vernal has been with Sequoia the longest, serving as partner since May 2016, according to his LinkedIn profile. Fradin (profile) has been a partner since September 2020, Khimji (profile) since November 2019 and Chen (profile) since May 2022, according to their LinkedIn bios.

While Sequoia alerted its LPs to the news about Moritz on Wednesday, he has not been a control person of Sequoia Capital Operations LLC since at least October 2021, according to a Form ADV.

The Form ADV shows 24 “direct owners and executive officers,” of which 17 are identified as “control persons.” The control persons at that time were managing members Botha, Doug Leone, Alfred Lin, Pat Grady, Craig Miller, Yoko Wai-Min Lee, Andrew Reed, Shaun Maquire, Ravi Gupta, Stephanie Zhan, Bogomil Balkansky, Konstantine Buhler and Sonya Huang. Also listed as control persons were global chief financial officer Louise Klemchuk, global CCO and US CLO Yeon Son, US CFO Ann Swank and US COO and operating partner Sumaiya Balbale, the filing shows.

Moritz, who has been a managing member since March 2013, according to the filing, was not a control person as of October 2021.

Moritz became a partner at Sequoia in 1986, according to his LinkedIn profile.

‘Hall of famer’

Sequoia credits Moritz with a lengthy list of wildly successful investments, including Google, Kayak, LinkedIn, PayPal, Yahoo! and Zappos. His $12 million investment in Google in 1999 alone is enough to put him in the VC hall of fame, if there were such a thing. When Google went public in August 2004, Sequoia’s stake was worth about $2.4 billion, or about 200x its original investment.

Moritz’s current portfolio of nine companies includes [24]7.AI, which operates a customer service platform; Instacart, a grocery delivery service; online payments companies Klarna and Stripe; and Watershed, which has been described as “a software platform that helps companies get to zero carbon fast.”

While he is stepping away from investing, Moritz “intends to deepen his advisory relationship with Sequoia Heritage, an independent business where he has been a founding limited partner and board member since 2010,” the LP letter states. “Sequoia Heritage is now a $15B global fund with investments in a  diversified range of of assets and partnerships and houses a large portion of the assets of Crankstart, the family foundation of Michael and his wife, Harriet Heyman, as well as investments from many other members of the greater Sequoia community.”

The letter adds that, “Michael will continue to represent Sequoia’s interests in a handful of companies where we have all enjoyed long-standing relationships with founders and CEOs. Over time, we will partner with portfolio companies to smoothly transition Sequoia board seats currently occupied by Michael.”

The news about Moritz follows closely on Sequoia’s announcement that it would split into three separate firms. In a memo to LPs that it posted on Twitter on June 6, Sequoia wrote, “We will move to completely independent partnerships and become distinct firms with separate brands no later than March 31, 2024.”

The firm noted that Sequoia China will adopt the name HongShan and be led by Neil Shen; Sequoia India/SEA will become Peak XV Partners and headed up by Shailendra Singh; and the firm’s US/Europe operations will continue to be known as Sequoia Capital and led by Botha.

Sequoia said the breakup was needed because, “It has become increasingly complex to run a decentralized investment business. For example, each business has evolved to meet opportunities in their markets across a wide variety of sectors… This has made using centralized back-office functions more of a hindrance than an advantage. Additionally, as each entity’s portfolio has expanded to include companies that are becoming global leaders, we’ve seen growing market confusion due to the shared Sequoia brand as well as portfolio conflicts across entities.”

This story has been updated with details from Sequoia’s letter to limited partners