Sequoia Europe Expansion: 7 Key Takeaways

Sequoia Capital, the well-known venture capital company from Silicon Valley responsible for funding successes like Apple, Google, Dropbox, Airbnb, and Stripe, has announced the launch of its inaugural European office.

To build its European team, Sequoia brought on Luciana Lixandru as a partner, recruiting her from competing firm Accel Partners.

Despite not having a formally established European office until now, Sequoia has been actively investing in the region for over ten years, beginning with an initial investment in Klarna back in 2010. The firm’s portfolio also includes numerous other companies originating in Europe, such as Baaima, CEGX, Charlotte Tilbury, Dashlane, Evervault, FON Wireless, Front, Graphcore, Mapillary, Metaswitch Networks, n8n, Remote, Skyscanner, Songkick, Tessian, Tourlane, UiPath, Unity and 6Winderkinder (Wunderlist).

This marks the first time Sequoia is establishing a physical presence in Europe, beginning with a London office tasked with making investments throughout the entire continent.

Luciana Lixandru is joined by George Robson, a less experienced investor who previously worked at Revolut. Recently, Sequoia also appointed Zoe Jervier Hewitt, formerly of EQT, as its European head of talent. Furthermore, Matt Miller, a long-standing member of Sequoia’s U.S. team, is contributing to these European initiatives and intends to move to Europe next year, and it is also my understanding that Doug Leone of Sequoia will dedicate a significant amount of his time to European operations.

I recently had the opportunity to interview Lixandru and Miller at the virtual “Node by Slush” event, where I gained further insight into Sequoia’s strategic objectives.

1. Sequoia now believes Europe is producing market leaders ahead of Silicon Valley

“A significant development and increasing sophistication within the European technology landscape has been a key factor in our decision to expand our presence and investment within the region,” explained Matt Miller, a partner at Sequoia.

“A notable shift can be observed in the career aspirations of recent graduates. Europe has consistently produced highly skilled individuals from its computer science programs, spanning universities throughout the continent and the United Kingdom. Previously, many of these talented individuals pursued careers in fields like investment banking, consulting, and large corporations. However, a growing number are now choosing to dedicate their efforts to startups and technology-focused roles, which is driving innovation and providing a strong talent pool.

“For a considerable period, the focus was on anticipating the emergence of a startup valued at over $10 billion, and now there are several such companies across Europe. The conversation has now evolved to predicting when Europe will produce its first company with a valuation exceeding $100 billion, reflecting a natural progression over time.

“We are finding ourselves increasingly drawn to opportunities in Europe. For instance, when seeking to invest in a leading global AI semiconductor firm, we evaluated companies in China, Israel, and Europe, ultimately choosing to invest in Graphcore, based in Bristol, U.K. Similarly, in our search for the top process automation company worldwide, we considered Automation Anywhere in California and numerous other businesses globally, and selected UiPath in Romania. This pattern is becoming more frequent.”

“Success also tends to encourage further success,” added Lixandru. “The presence of strong role models is incredibly influential. The emergence of European companies that are globally successful category leaders, such as Spotify, Adyen, and UiPath, serves as a significant source of inspiration for the next wave of entrepreneurs, and has undoubtedly contributed to this positive trend.”

2. The firm will make investments using the same fund in both the U.S. and Europe.

“Our organization functions as a unified partnership spanning both regions, and we deploy capital from a single fund across both markets,” Lixandru clarified. “This approach directly supports the point Matt highlighted. Our goal is to collaborate with top-tier companies, and their initial location – whether it’s Paris, Stockholm, or San Francisco – is not a determining factor for us. We aim to engage with them at an early stage and provide on-the-ground support from the beginning, regardless of whether they launch in Europe or the U.S.”

In line with this strategy, Sequoia will distribute carried interest – the fund’s earnings – among partners in both the U.S. and Europe, irrespective of their location or the origin of the investment.

“A key aspect I’ve appreciated during my nearly nine years with Sequoia is our highly collaborative operating model, where all team members receive equivalent compensation from a fund, regardless of whether they spearheaded the investment or supported a colleague’s deal,” Miller stated. “When we invest, we operate as a cohesive team, collectively dedicated to the success of that company.”

Miller also noted that European portfolio companies will benefit from access to Sequoia’s operational support teams based in the U.S., facilitated by the firm’s financial structure.

3. Sequoia will continue building out a team on the ground in Europe

Miller explained that Sequoia’s commitment to establishing a local team and opening an office in London demonstrates a full and dedicated approach. He referenced the firm’s successful expansion into China and India, where they ultimately became a leading venture capital presence. “Our goal is to replicate that success within Europe,” he stated.

“However,” Miller continued, “we’ve learned from previous experiences that rapidly assembling a completely new, large team in a new region can be problematic. Our strategy for Europe involves a phased expansion of the existing team currently operating from Menlo Park, California. This allows us to carefully recruit exceptional talent, ensure our firm’s culture is effectively integrated, and share valuable organizational knowledge. We prioritize a gradual, quality-focused team build-up over a quick deployment of a large number of new hires, but our dedication to becoming the foremost venture capital firm in Europe remains unwavering.”

4. Matt Miller, long-time Sequoia partner, is relocating to Europe as soon as conditions permit

Miller explained that the relocation plans were initiated before the onset of the pandemic. He had originally anticipated being stationed in Europe already, but the presence of young children led to a decision to postpone the move. The family preferred to wait for the availability of a vaccine or a more stable situation. He expressed optimism about making the move this summer.

5. Sequoia will do more European seed investments as it aims to build super-early relationships

Lixandru explained that a key aspect of Sequoia’s operational philosophy is its commitment to supporting founders at every stage of their development. “Sequoia invests across the entire lifecycle of a company, from initial seed funding through periods of growth and even beyond,” he stated. “Our firm’s motto, ‘from idea to IPO and beyond,’ reflects this comprehensive approach to investment.”

Despite this broad investment scope, Sequoia intends to foster a cooperative relationship with existing seed-stage investment firms throughout Europe.

“We are dedicated to a highly collaborative strategy, particularly when it comes to seed investments,” Lixandru added. “Europe’s seed funding landscape is characterized by a strong local presence, with numerous seed funds operating in countries like France, Germany, and throughout Eastern Europe. We aim to work alongside these funds, and to connect with founders early on, as we believe the most ambitious entrepreneurs—those who strive to disrupt conventional thinking—are the ideal partners for Sequoia. Therefore, identifying these founders at the earliest possible stage is a priority, and we will achieve this through collaboration at the seed level.”

6. Sequoia has already expanded its angel scout network to Europe in a bid to source deals early

Miller explained that Sequoia developed a system roughly ten years ago to empower individuals connected to their network to discover promising investment prospects. This led to the creation of a scouts program, which has received prior attention in the United States. As Sequoia establishes a stronger presence in Europe through local partnerships, they have broadened this scouts program to encompass European connections and facilitate investments in European-based companies.

Lixandru added that this initiative is also focused on fostering a strong network. The goal is to integrate individuals into the Sequoia community as they begin operations in Europe. These are established relationships – people Sequoia has known and collaborated with for some time. While identifying exceptional entrepreneurs and companies is a key objective, building a close-knit community within Europe is equally important.

Despite being asked, Miller did not reveal the current or projected size of Sequoia’s European scout network. He stated that they do not publicly share these figures due to fluctuations in participation. However, he emphasized that the program is in its initial phases of development and that they are enthusiastic about the individuals currently involved in the community.

7. “Every round these days is a competitive dogfight”

Miller explained the current venture capital landscape as intensely competitive, noting the presence of numerous excellent firms capable of providing significant value to companies seeking investment. He stated that circumstances often dictate their approach, sometimes leading them to increase their investment, while other times a founder may prefer to include additional investors – perhaps due to existing relationships or a preference for a specific partner. He clarified that concerns about signaling are diminished because nearly every funding round is fiercely contested.

“Ultimately, the decision rests with the entrepreneur,” Lixandru emphasized.

The question arose regarding the potential negative market perception if Sequoia were to decline participation in a subsequent funding round. Miller countered this point, highlighting that many of their initial seed investments have been successfully led by highly respected competitors in the Series A stage. He reiterated that differing viewpoints and intensive competition characterize the current environment, with each firm pursuing its own unique strategy and efforts.