Sequoia’s Roelof Botha Urges Founders to Avoid Chasing Inflated Valuations

In Focus

• Botha warns founders against chasing inflated valuations
• Sequoia doubles down on its selective investment approach
• Government equity moves draw caution from Botha
• Consensus-driven strategy anchors Sequoia’s investment philosophy

Sequoia Capital’s global steward Roelof Botha issued a measured warning to founders tempted by surging valuations and rapid fundraising cycles as reported by TechCrunch. Speaking shortly after the Trump administration’s announcement of permanent government equity stakes in private companies, Botha quipped, “[Some] of the most dangerous words in the world are: ‘I’m from the government, and I’m here to help.’”

A self-described “libertarian, free market thinker,” Botha acknowledged that industrial policy has its place when national security is at stake, noting that the United States’ intervention stems from competition with state-backed economies such as China. However, his comments reflected a broader discomfort with external forces,whether political or financial,shaping innovation through artificial capital flows.

Valuation Whiplash and the Case for Prudence

Addressing a packed audience, Botha highlighted the recurring issue of inflated startup valuations. He recounted how one of Sequoia’s portfolio companies had soared from $150 million to $6 billion in 2021 before losing most of its paper value. The volatility, he said, can strain teams and founders alike.

“The challenge you have inside the company for the founders and the team, [is] you feel as though you’re on this trajectory, and then you end up being successful, but it’s not quite as good as you hoped at one point,” he explained.
Botha advised a measured approach to capital raising: founders should avoid unnecessary funding rounds if they have at least twelve months of runway.

“You’re probably better off building because your company will be worth so much more 12 months from now,” he said, while recommending that those within six months of needing capital act quickly before markets shift. Drawing from mythology, he warned, “If you fly too hard, too fast, your wings may melt.” In June, 2025, Crosby launched an AI-powered law firm, backed by Sequoia Capital, with $5.8 million in seed funding.

Inside Sequoia’s Selective and Consensus-Driven Model

In line with its disciplined philosophy, Sequoia recently announced two new early-stage funds totaling $950 million, a modest scale compared to previous cycles. Botha reaffirmed that the firm remains focused on seed-stage investments, having backed 20 companies in the past year, nine at incorporation. “There’s nothing more thrilling than partnering with founders right at the beginning,” he said.

Using a memorable analogy, Botha compared Sequoia to mammals rather than reptiles: “We don’t lay 100 eggs and see what happens. We have a small number of offspring, like mammals, and then you need to give them a lot of attention.” This disciplined, high-touch approach aligns with the Sequoia selective investment approach, where partnership consensus determines every investment decision.

A Measured Outlook for Global Venture Capital

Botha’s remarks carried a broader message for the venture ecosystem. He asserted that venture capital should not be treated as an asset class, citing that without the top 20 firms, industry-wide returns would lag behind index funds. With over 3,000 venture firms now active in the U.S., he cautioned against excessive capital flooding Silicon Valley. “Throwing more money into Silicon Valley doesn’t yield more great companies. It actually dilutes that,” he said.

The underlying message of Botha’s commentary, and Sequoia’s enduring philosophy, is clear: discipline, selectivity, and focus remain critical in a market defined by volatility and excess. For global founders and investors alike, the Sequoia selective investment approach serves as a model for sustainable innovation and thoughtful capital allocation amid an era of inflated valuations and increased government participation.

In other news, HongShan, previously the China investment arm of Sequoia Capital and formerly known as Sequoia Capital China, entered the late stages of deal negotiations. The firm is seeking to acquire the legendary Marshall Group at a valuation of $1.1 billion.

Strategic Takeaway for Industry Leaders

As venture capital continues to evolve under geopolitical and market pressures, Botha’s perspective reflects a pragmatic realism suited to modern investors. By resisting the allure of inflated valuations and maintaining a consensus-driven ethos, Sequoia Capital reinforces that long-term success depends less on speed and more on sustained value creation. For founders navigating the uncertain terrain of global venture funding, restraint may prove to be the most strategic move of all.