Sequoia’s Surge vs Southeast Asia’s Investors

How a “unicorn hunting” fund is leading to conflict in Southeast Asia startup circles

Sequoia has always been the venture capital firm to beat in Southeast Asia. It out-muscles all others in the region on financial firepower, history, international reach and — crucially — reputation. Sequoia India and Southeast Asia — as its fund is called in this part of the world — has always enjoyed these unfair advantages.

But Surge is a tacit admission that the firm can do better on early stage deals. Sequoia counts unicorns — startups valued over $1 billion — Ola, Zomato, OYO, Byju’s, Freshworks and MuSigma in its portfolio. However, it was not an early investor in any of these, limiting its upside from such deals.

Over in Southeast Asia, the situation is different. The firm has taken advantage of a higher signal-to-noise ratio and reduced competition to take lucrative stakes in unicorns such as Gojek, Tokopedia and Traveloka, as well as those still vying for billion-dollar valuations such as Zilingo, One Championship and Carousell. While it has always had a reputation for tough dealing, Surge has pushed things further despite pledges to work closely with other VCs.

“We’ve made seed investments and collaborated with other firms in the past. We’ve already spoken to a few friendly firms and they are excited to be involved,” Shailendra Singh, one of Sequoia’s managing directors, said in January regarding the potential to collaborate with other investors.

The investors who spoke to The Ken voiced concern that Surge companies are pricing themselves out of potential investments. That may be true in these instances, but it belies a wider ambition that Sequoia is shooting for in Southeast Asia — an important growth market for the firm.

Read more about this interesting conflict in startup circles here: https://the-ken.com/story/sequoia-surge-bet-southeast-asia/

This excerpt is a part of a story published on The Ken on 18th September 2019, by Jon Russell.

The Ken is a subscription-based digital publication headquartered out of Bengaluru, India. It publishes one in-depth analytical story everyday about start-ups, technology, healthcare and science with an India-specific lens.

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