This is the most important thing I was wondering about. If crypto businesses are shady and Ponzi schemes and these crypto guys are working mostly behind the scene, why would a VC like Sequoia invest in such firms?
I somehow feel firms like Sequoia gave these crypto stuff some credibility and positive exposure. It was like, "don't worry, their business is legit and booming.'
SBF invested heavily in Sequoia as a limited partner. Him raising money from Sequoia in return was a way of adding legitimacy to his empire. Sequoia's motivation was simply to make money. Even famous VC firms aren't immune to making dumb decisions or falling for some fantasy hype rationale. Sequoia had a very fawning blog piece on SBF up that paints a very unfavorable picture of the decision making here, and hilariously enough they were proud of it until the bubble popped.
Or in more charitable terms: if an investment has a positive expected return according to their model (meaning that they think they can sell their shares / tokens in the case of some VCs), they do it.
Seriously though, a lot of influencers promoting this stuff have been getting paid in cold hard US dollars to promote these scams.
How do I know? I spoke to influencers to talk about my portfolio companies and many of them told me the crazy amount of cash they were getting paid from these scammers. Think 25,000 for a channel with hardly 100k followers.
That's why I feel like Sequoia partners should be investigated thoroughly. If a terrorist organization gets investments, don't we investigate those investors as well?
If you drop morals, like a16z did, by supporting another scammer and gritting on crypto, it's a very lucrative business.
That's nothing compared to what stake and the other bitcoin casinos have been spending on influencers. Until twitch banned them their top sponsored streamers were making a reported 2 to 3 million a month.
Likewise there's tons of crypto money sloshing around the esports world. FTX paid TSM 200 million for naming rights.
In an environment like this its really hard for legit sponsors to pitch influences unless the influencer is personally interested or ethically refuses to work with the crypto sponsor whales.
I somehow feel firms like Sequoia gave these crypto stuff some credibility and positive exposure. It was like, "don't worry, their business is legit and booming.'