Sequoia Targets More Than $1B For Fund With New Structure
Sequoia Capital is in the market for a massive new fund that will emphasize China and bring several investment strategies under one umbrella instead of dividing them between separate funds, according to investors familiar with the situation. The Menlo Park, Calif.-based firm aims to raise north of $1 billion for Sequoia Capital 2010 LP, these investors say. The structure of this fund, a new tactic for the firm, is designed to comprise China growth and early-stage investments as well as U.S. early-stage deals. Partners at Sequoia Capital couldn't immediately be reached for comment. The fund is expected to hold a final close on March 25 of next year, one investor said. Sequoia is changing its structure to be opportunistic and place a greater focus on China, this investor said. The China early-stage portion of the vehicle is targeted at between $250 million and $300 million, this investor said. The U.S. early- and very early-stage part will target between $400 million and $450 million, while the China growth strategy will aim for between $500 million and $600 million. Two other investors, however, said Sequoia has wider discretion over the allocation figures. The firm's Israel strategy won't be included in the new structure, investors said. Although the reasons are unclear for not including that portion, the firm's Sequoia Capital Israel IV LP wrapped up fairly recently – at the end of December 2008. The vehicle will charge a 2.5% management fee until after the sixth year, when it will drop a quarter of a point each year until it reaches 1.5% on the 10th year, according to one investor who received the private placement memorandum. The fund will have a 30% carry, that investor said, noting that the terms are similar to past Sequoia vehicles. Historically, Sequoia has raised separate funds for the various strategies in the new vehicle. It raised $429.75 million for Sequoia Capital China Growth Fund I in 2007, and $220.5 million for Sequoia Capital China II LP that same year. It also raked in $445 million for Sequoia Capital XII, an early-stage fund focused on the U.S., in 2006. One past investor in the Sequoia funds said he is undecided on whether to commit to the new vehicle since it doesn't give him the choice to pick strategies.