South African Roelof Botha to head Sequoia, the world’s foremost venture capital firm

Not known for outrageous tweets, opinionated podcasts or anything that draws unnecessary attention to himself, South African Roelof Botha has quietly been named Senior Steward of the world’s most celebrated private equity firm, Sequoia Capital. 

But it’s a move that comes as no surprise. Botha is a Silicon Valley insider who has been on Forbes’ list of best venture capital investors no fewer than 13 times. He joined the US-based firm Sequoia Capital – named after the longest living redwood tree on the planet – in 2003. Then, in 2017, he became one of its three senior stewards – lead partners, in layperson’s terms. 

On Monday, 4 April, the firm’s current Senior Steward, Doug Leone, announced that he would be passing the baton to Botha on 5 July, the day that he retires. 

“Roelof will set the overall tone and oversee the global centralised functions, including compliance, finance and culture,” Leone wrote in a letter to shareholders.

Arguably, he has been doing this for some time, along with Neil Shen, also a steward and head of Sequoia China. “He [Botha] was a driving force behind the launch of the Sequoia Capital Fund and our Scouts programme, two initiatives that transformed our business,” Leone wrote.

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Best known for its investments in startups in the energy, financial, enterprise, healthcare, internet and mobile industries, the venerable 50-year-old firm is known for its ability to spot winners early on. 

Investments read like a Who’s Who of the tech industry and include Apple (in 1978), Cisco, Google, LinkedIn, WhatsApp, Zoom, PayPal, Reddit, Instagram and Tumblr.

Botha studied actuarial science at the University of Cape Town, becoming South Africa’s youngest licensed actuary at 22. He moved to the US with McKinsey and enrolled at Stanford’s Graduate School of Business, where he met Elon Musk. 

He famously declined Musk’s invitation to join PayPal’s finance team, not once, but twice, before relenting and agreeing to join the firm in March 2000. (As an aside, he also declined the CFO role at Facebook in the early 2000s). 

At PayPal, Botha rose to become the company’s CFO at the age of 28 and oversaw the listing of the firm, much to the horror of Wall Street analysts who saw him as a babe in the woods. Shortly thereafter, he helped negotiate the sale of PayPal to eBay in 2002. 

At that point, the world was his oyster – but he turned down an offer from Meg Whitman to stay at eBay with a big title and bigger package. Instead, he accepted an offer to join Sequoia as a partner.

There he negotiated some humps and bumps, notably the 2008 financial crisis, but seems to have found his groove. 

“So many times, I’ve led an investment and been made fun of,” he writes in his bio on the Sequoia website. “YouTube. Instagram. MongoDB. There’s a little defiance in saying, ‘We’ll show you!’ 

“I remember in 2001, when I was at PayPal, there was an article titled ‘Earth to Palo Alto’. It said we were deranged, that we didn’t know what we were doing. In the meantime, I was inside the building, knowing that we were months away from being profitable and on our way to being a public company.”

His goal, Botha writes on his LinkedIn profile, is to help exceptional founders realise their highest ambitions. 

“I work alongside entrepreneurs from the earliest stages as their business partner, drawing upon my operating experience at PayPal and Sequoia’s shared tribal knowledge. I find myself captivated when a founder recounts what inspired them to strike out on their own. It’s that vision and connection to user needs that shape the company’s DNA and sets its ultimate trajectory.”

At Sequoia he has worked with companies that democratise technology access (Square, Eventbrite, Unity), create global user communities (YouTube, Tumblr, Instagram) and disrupt markets through innovative business models (Evernote, Weebly, Xoom). All of them, he says, are led by inspirational founders and management teams who take a unique approach to solving meaningful problems.

More recently, though, he has been applying his mind to the future of his own industry, venture capital, and in 2021 was instrumental in restructuring Sequoia itself. 

“Ironically, innovations in venture capital haven’t kept pace with the companies we serve,” he wrote in an October 2021 blog post. 

“Our industry is still beholden to a rigid 10-year fund cycle pioneered in the 1970s. As chips shrank and software flew to the cloud, venture capital kept operating on the business equivalent of floppy disks. Once upon a time, the 10-year fund cycle made sense. But the assumptions it’s based on no longer hold true, curtailing meaningful relationships prematurely and misaligning companies and their investment partners.”

At Sequoia, it was becoming apparent that category-defining companies – Apple, Google, Cisco, Unity, Snowflake, Zoom – take more than a few years to build, longer than the average venture capital investment cycle. 

“In recent years, many of our most promising companies have chosen to stay private longer, building scale and expanding their strategic footprint before debuting as public market leaders. They then compound their advantage for decades, with much of their value accruing long after an IPO.”

Botha realised that the firm was losing out by selling out of its investments in these firms on their listing. Thus he was instrumental in the creation of a new structure that would allow all of Sequoia’s investments to roll up into a single fund called the Sequoia Fund. Notably, it removed all artificial time horizons on how long the company could partner with its investee firms. 

At the same time, Sequoia transitioned from a venture capital firm into an investment adviser, a fundamental disruption to the venture capital model – but not the first, it should be noted.

At the ripe old age of 48, one assumes that Botha will continue making his mark on startups and on the venture capital industry for years to come. DM/BM

 

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