Sequoia is the latest VC firm telling you to take the downturn seriously

Sequoia takes things seriously. The storied venture firm is known to react to macroeconomic events with grand memos aimed at portfolio companies and sometimes the entrepreneurship scene at large.

Most recently, Sequoia created a 52-slide deck, first reported by The Information, titled “Adapting to Endure.” The document reads like a follow-up course to its infamously ill-timed “Coronavirus: The Black Swan of 2020” memo of March 2020.

The firm is not always right in its prognostications — maybe why it stuck to internal musings instead of a Medium post this time — but it does do a service in providing a snapshot of how one of the most weathered, and successful, VC firms of all time thinks about a looming downturn.

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“Our intention in gathering today is not to be a beacon of gloom,” the deck reads. “But we also believe that winning in the years ahead is going to depend on making hard, decisive choices confronting uncomfortable challenges that may have been masked during the exuberance and distortions of free capital over the past two years.”

Sequoia’s advice largely followed the same script that other venture firms have been using: extend runway, focus on sustainable growth and recognize that an economic recovery may be a ways away. There were, however, some tidbits that stood out, such as a subtweet that I’m guessing is meant for Tiger Global and a precise explanation of how founders should define fluff these days.

The capital provider blames capital itself — capitalism, huh?

One of the clearest subtweets within the deck is Sequoia’s commentary on cross-over funds. The firm says that “cheap capital is not coming to the rescue” at this moment:

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