Sequoia to founders: Prepare for the long haul; Andreessen Horowitz commits $4.5 bln more to crypto's ‘golden era’

Sequoia Capital, one of the world’s best-known venture capital firms, has warned founders of its portfolio companies that the flow of cheap money is over, and investors now have a distinct preference for ventures that can generate cash today. In a 52-slide presentation, the company advises startups to conserve cash, cut any flab, and prepare for the long haul, because it doesn’t expect a quick recovery in the global economic conditions, unlike what happened after the Covid pandemic. “With the cost of capital (both debt and equity) rising, the market is signalling a strong preference for companies who can generate cash today,” Tech Crunch reports, citing Sequoia’s presentation. “We expect the market downturn to impact consumer behaviour, labour markets, supply chains and more. It will be a longer recovery and while we can’t predict how long, we can advise you on ways to prepare and get through to the other side,” the VC firm says, according to Tech Crunch. Meanwhile, another famous VC firm, Andreessen Horowitz yesterday announced it was going big on crypto and web 3, with a $4.5 billion fund to benefit from what it sees as the beginning of a “golden era” of Web3, brushing aside the recent crypto crash. Such periods are characterised by the right mix of new talent, viable infrastructure, and community knowledge. It’s “when legendary teams are formed, big ideas are hatched, and great products get built,” Chris Dixon, a general partner at the firm wrote in a blog post yesterday. Since the advent of computing in the 1940s, there has been a major computing cycle every 10-15 years, including PCs in the 80s, the internet in the 90s, and mobile computing in the 2000s, Dixon points out. “We believe blockchains will power the next major computing cycle,” he writes. Of the $4.5 billion, approximately $1.5 billion will be dedicated to seed investments, and $3 billion to venture investments. This brings the firm’s total crypto/Web3 funds to more than $7.6 billion, according to the blog post. Snowflake yesterday joined the list of technology companies warning of a slowdown, sending its shares down as much as 16 percent in extended trading, CNBC reports. The company’s shares ended lower by about 14 percent. The data management and analytics software maker disappointed analysts by saying it doesn’t expect a positive adjusted operating margin for the current quarter, according to CNBC. While the company is still growing revenue strongly at upwards of 70 percent, Snowflake’s CFO Mike Scarpelli told analysts at a conference yesterday that the company was seeing the impact of the macroeconomic situation on its customers’ businesses, which in turn was likely to reduce their consumption of its software products. Theme music courtesy Free Music & Sounds: https://soundcloud.com/freemusicandsounds