Venture Capital Isn't an Asset Class, Sequoia's Roelof Botha Argues

Venture Capital: Not a Traditional Asset Class, According to Sequoia's Roelof Botha

During his appearance at TechCrunch Disrupt 2025, Roelof Botha, a managing partner at Sequoia, presented a contrarian viewpoint regarding the venture capital landscape.

He posited that venture capital should not be categorized as a conventional asset class, and that simply increasing financial investment in Silicon Valley does not automatically result in the creation of superior companies.

A Return-Free Risk

Botha articulated that “investing in venture is a return-free risk” during a discussion on the main stage at TechCrunch Disrupt on Monday.

He explained this assertion stems from the understanding, within the capital asset pricing model, that venture capital’s performance isn’t correlated with other investment types.

Limited Opportunities for Exceptional Growth

The belief among many investors has been to dedicate a specific portion of their portfolio to venture capital, anticipating that increased funding would benefit the industry.

However, Botha countered this notion, stating that the number of truly impactful companies is finite.

He believes that injecting more capital into Silicon Valley doesn’t necessarily foster more exceptional businesses; instead, it potentially hinders the growth of the few truly special companies.

Industry Growth and Competition

Botha highlighted the significant increase in the number of venture firms operating in the United States.

Currently, there are approximately 3,000 firms, a substantial rise from the 1,000 that existed when he joined Sequoia two decades ago.

Evolving Technological Landscape

Reflecting on the changes over the past 20 years, Botha pointed out the technological advancements that have reshaped the investment environment.

In 2003, mobile devices were not prevalent, cloud computing was in its infancy, and internet access was limited to around 300 million people globally.

The scale of opportunity today is vastly different.

Over the last two decades, approximately 380 companies have achieved valuations exceeding one billion dollars – averaging around 20 per year.

Sustainability of Growth

While this number is considerable, Botha expressed skepticism that this rate of growth can be sustained simply by increasing the amount of capital flowing into the venture industry.

He suggests that further investment alone won't guarantee a continued increase in billion-dollar outcomes.