Sequoia Capital Allegedly Kicked Out LP Yale University From Its Investor Group
Sequoia Capital, one of Silicon Valley’s top venture capital funds, has reportedly kicked out equally celebrated limited partner (investor in venture capital funds) Yale University from its partner group. The highly sensitive conflict between the fund and its LP was reported by Wall Street Journal. The ground for the conflict was that the investors like Yale University, which has an $18 billion endowment fund, have complained that venture capital funds are putting pressure (explicitly or implicitly) on them to invest in “unproven investment vehicles” (for instance, the funds dedicated for countries like China and India) as a precondition for entry to the main fund.
The war between Yale and Sequoia reached a point that Sequoia has shown them the door. The issue has aggravated lately since most VC firms are raising funds for emerging markets. Some LPs - big university endowments, foundations and pension funds - are probably not inclined to invest in such countries because they are yet to prove as safe investments.
Yale apparently declined to invest in some funds launched in the past few years by Sequoia, including a 2005 fund focused on Chinese companies, WSJ reports, adding Sequoia later decided to “oust Yale from its partner group”. Sequoia reportedly told Yale that it preferred investors that would give the firm a “blank check” to invest. It remains to be seen how the fight between the top dogs of the investing business will play out.
