Sequoia’s Roelof Botha warns ‘chumps’ not to buy into SPVs

Sequoia’s managing partner, Roelof Botha, warns of a potential greed cycle in venture capital, with unsophisticated investors at risk.

Botha cautions against the resurgence of special purpose vehicles (SPVs), where investors buy shares in the SPV rather than the startup itself, leading to inflated prices and potential losses.

SPVs are prevalent in AI investing, with companies like Anthropic and Figure AI utilizing them to raise substantial funds.

Major AI companies are also using SPVs, often leveraging the reputation of leading VC firms to attract buyers.

Botha’s advice to investors considering SPVs: “Don’t buy it.”

Sequoia has not yet provided further comment on the issue.