According to Forbes, Sequoia Capital managing partner Roelof Botha is stepping down after three years leading one of Silicon Valley’s most powerful venture firms. His tenure began in 2022 but quickly became defined by crises including the firm’s retreat from China and India amid U.S. regulatory pressure. The situation escalated this summer when partner Shaun Maguire posted inflammatory comments about New York mayoral candidate Zohran Mamdani, leading to COO Sumaiya Balbale’s resignation and investor backlash. Several major limited partners including public endowments and sovereign wealth funds questioned their commitments, with some calling for formal reviews of investments in nearly fifty Sequoia funds. Veteran partners Alfred Lin and Pat Grady are now taking over as co-stewards to rebuild confidence.
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<h2 id="trust-crisis“>The trust crisis hits home
Here’s the thing about venture capital – it’s fundamentally a trust business. And Sequoia‘s recent troubles show how quickly that trust can evaporate. When major investors like the University of California and Michigan start questioning whether your firm’s values align with theirs, you’ve got a real problem. These aren’t just any investors – they’re institutions that have poured money into nearly fifty Sequoia funds over the years.
But the bigger issue might be what this says about Sequoia’s famous partnership model. The firm has always prided itself on being disciplined and unified. Yet we saw public disputes with former partner Michael Moritz over a Klarna board seat, then the Maguire social media controversy that cost them their COO. When your own team starts resigning in protest, that’s a signal that something’s broken internally.
The investor backlash is real
What’s really striking is how diverse the pushback has been. You’ve got U.S. public endowments concerned about fiduciary duty and ethical investment frameworks. Then you’ve got sovereign wealth funds from the Gulf region, which have become massive VC backers, worried about integrity and inclusion. Basically, Sequoia managed to alienate investors across the political and cultural spectrum.
And let’s be honest – in today’s environment, limited partners have options. There’s no shortage of venture firms hungry for capital. When Sequoia’s response to controversial partner behavior was to defend “free speech” rather than address concerns directly, they created an opening for competitors. Other top-tier firms like Andreessen Horowitz and Accel must be watching this unfold with keen interest.
What comes next for Sequoia
Now Alfred Lin and Pat Grady take the helm with impressive track records – Lin with early bets on Airbnb and DoorDash, Grady with growth investments in OpenAI and ServiceNow. But their challenge isn’t about finding the next unicorn. It’s about repairing relationships.
The firm remains financially strong, but prestige in venture capital is fragile. When founders choose investors, they’re not just looking for money – they’re looking for partners they can trust. After this summer’s controversies, that decision just got harder for entrepreneurs considering Sequoia.
Rebuilding that founder trust while keeping limited partners happy will be the real test. Because in venture, your reputation is your most valuable asset. And right now, Sequoia’s took a serious hit.
