In a striking shift from traditional economic intervention, the Trump administration has initiated the direct acquisition of equity positions in American corporations, signaling a departure from the emergency-oriented bailouts that defined the 2008 financial crisis. Unlike those temporary lifelines, these new investments appear intended as enduring components of a broader industrial strategy, raising profound and somewhat unsettling questions about the evolving relationship between government and private enterprise. Among them is the provocative inquiry: what transpires when the federal government, embodied by the executive branch, assumes a place on a company’s capitalization table—an intersection where state power meets entrepreneurial ambition.
This very issue surfaced last week at TechCrunch Disrupt in San Francisco, where Roelof Botha, the global steward and longtime partner at Sequoia Capital, addressed a packed audience. When asked about the wisdom of allowing the White House to sit alongside venture investors, Botha responded with incisive humor that elicited knowing laughter throughout the auditorium: “One of the most dangerous words in the world are: ‘I’m from the government, and I’m here to help.’” His quip, equal parts cynicism and historical reflection, underscored a skepticism deeply rooted in libertarian and free‑market thinking. By his own description, Botha considers himself “sort of libertarian, a free‑market thinker by nature,” yet he acknowledged—perhaps grudgingly—that government involvement can have a legitimate role when national priorities compel action.
Elaborating further, Botha observed that the United States has been driven toward industrial policy not out of ideology but necessity, in large measure because rival global powers deploy similar tactics to advance their geopolitical and economic agendas. In plain terms, America’s participation is a strategic response to a game others have already been playing—China foremost among them. In his view, to abstain would be to forfeit influence over industries critical to the nation’s long‑term security.
Nevertheless, his unease about the state as a co‑investor was palpable, a discomfort that transcends Washington and echoes across the broader financial landscape. Botha drew pointed parallels between current market exuberance and the hyperactive funding environment of the pandemic era, though he tactfully avoided labeling today’s atmosphere a “bubble.” Preferring diplomatic phrasing, he described it instead as “a period of incredible acceleration,” while cautioning that such speed often brings the peril of inflated valuations—growth untethered from sustainable value.
Illustrating his concern, Botha recounted a striking example discussed at Sequoia only hours before his appearance: a portfolio company whose paper valuation rocketed from $150 million to a staggering $6 billion within a single year during 2021, only to collapse back toward the ground once the fever broke. The psychological whiplash inflicted by that trajectory, he said, can be intense. Founders and teams swept up in meteoric success often mistake short-term ascent for permanent altitude, and when reality reasserts itself, even genuine accomplishments can feel diminished by comparison to earlier, unrealistic highs. The temptation to continue raising capital—simply to preserve momentum—becomes almost irresistible. Yet as Botha warned, the steeper the climb, the harder the eventual descent, and few experiences are more demoralizing than watching a notional windfall vanish before one’s eyes.
Speaking to the crowd of founders and investors, Botha offered practical guidance for navigating what he called “frothy waters.” His advice followed a pragmatic, two‑track logic shaped by experience: if your business has sufficient resources to operate for at least a year, resist the urge to raise additional capital. Focus instead on product development, customer traction, and internal resilience. Twelve months hence, he argued, the enterprise itself—stronger, leaner, and more valuable—will justify a far higher valuation on sturdier terms. Conversely, if a company anticipates needing funds within six months, seize the present window while markets remain buoyant, for sentiment can shift abruptly and liquidity disappears faster than confidence can rebuild.
True to his classical education, Botha drew upon mythology to crystallize the peril of overexuberance. Reminiscing about his high‑school Latin studies, he invoked the story of Daedalus and Icarus—the father who crafted wings to escape captivity and the son who soared too high, his wax melting under the punishing sun. “That story stuck with me,” he reflected, “this idea that if you fly too high, too fast, your wings may melt.” The parable, simple yet timeless, embodies his counsel to today’s founders: ambition must be balanced with prudence, and success must not tempt one toward hubris.
When Botha speaks, entrepreneurs across the technology world listen. Sequoia’s record commands attention: the firm placed early bets on companies that would go on to redefine entire industries—Nvidia, Apple, Google, Palo Alto Networks, and many others. At Disrupt, Botha also revealed Sequoia’s latest initiatives: two new investment vehicles, a seed fund and a venture fund totaling $950 million. Interestingly, he pointed out, those sums mirror the scale of similar funds launched six or seven years prior, emphasizing continuity over expansion.
Although in 2021 Sequoia restructured its investment platform to enable longer‑term holdings of public equities, Botha reaffirmed that early‑stage investing remains at the heart of the firm’s identity. Over the preceding twelve months, Sequoia backed twenty seed‑stage startups—nine of them literally at the moment of incorporation. In his words, “There’s nothing more thrilling than partnering with founders right at the beginning.” Using a biological metaphor, Botha explained that Sequoia prefers a “mammalian” approach rather than a “reptilian” one: “We don’t lay a hundred eggs and see what happens. We nurture a small number of offspring, providing them with intensive care and attention.” This philosophy reflects a deliberate focus on quality over quantity, patience over proliferation.
From experience, Botha admitted that venture capital is humbling work. Over the past quarter‑century, half of Sequoia’s seed and venture investments have failed to recover their full capital outlay. Failure, he suggested, is not an aberration but a necessary toll on the road to extraordinary outcomes. He recalled that after his first complete loss on an investment, he wept in a partners’ meeting—a moment of personal vulnerability that underscored how emotionally taxing the business can be. Yet those painful experiences, he argued, are integral to achieving the rare outliers that make the effort worthwhile.
Reflecting on what distinguishes Sequoia from the thousands of other venture firms in existence today, Botha credited the firm’s rigorously democratic and consensus‑based decision‑making process. When he joined the partnership two decades ago, he was astonished to discover that every investment required unanimous partner approval, and that each partner’s vote carried identical weight regardless of seniority or title. Every Monday, their meetings begin with an anonymous poll designed to surface authentic opinions on proposals digested over the weekend. Private lobbying or side conversations are strictly prohibited. The objective is not unanimity for its own sake but the cultivation of clarity, independence, and ultimately, excellence in judgment. Botha recounted instances when he spent six months persuading colleagues to support a single growth‑stage investment, proof of how laborious but essential the process can be. “No one, not even me,” he emphasized, “can force an investment through our partnership.”
Perhaps the most striking of Botha’s assertions concerns the nature of venture capital itself. Despite its widespread allure, he contends that venture capital, in aggregate, should not be considered a conventional asset class. Stripped of its top performers, the sector’s average returns fail to surpass even those of a passive index fund. With more than 3,000 active venture firms in the United States—triple the number that existed when Botha joined Sequoia—the influx of capital has not produced proportionately greater innovation. Instead, it has diluted opportunity, crowding the ecosystem and impeding the emergence of truly transformative businesses. The antidote, in his view, lies in restraint: remain small, preserve focus, and remember that only a limited number of companies will ultimately change the world.
That philosophy—patient, selective, and grounded in discipline—has undergirded Sequoia’s enduring success across economic cycles. And in an era when governments seek equity stakes, valuations routinely outpace fundamentals, and investors flood the market chasing the next technology miracle, Botha’s insistence on compactness and clarity may be the most contrarian, and therefore the most valuable, advice of all.
Sourse: https://techcrunch.com/2025/11/02/sequoias-roelof-botha-warns-founders-about-chasing-sky-high-valuations-as-the-firm-doubles-down-on-its-selective-approach/
