Yahoo Finance Sequoia’s Botha Says Venture Capital Firm Is Focusing on AI Apps After OpenAI Success
(Bloomberg) -- Sequoia Capital isn’t looking to become an active investor going forward in companies involved in the building blocks of artificial intelligence technology, its steward Roelof Botha said on the sidelines of a JPMorgan Chase & Co. conference in London on Monday.
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“Our funds are just not designed to do that,” he said, referring to covering the huge costs for the computing power needed to build large language models and their equivalents in other media such as images. These building blocks are known as foundation models.
Sequoia is an investor in OpenAI, the startup that popularized its large language model when it introduced ChatGPT last year. However, Sequoia invested in 2021, before OpenAI’s recent run up in price. OpenAI is now talking to investors about a valuation of between $80 billion and $90 billion, according to the Wall Street Journal.
The firm’s core funds target early-stage companies.
AI is a central part of Sequoia’s investment strategy, Botha said, but it targets companies that interact with foundation models rather than create the models themselves. Other companies building foundation models like OpenAI include Anthropic and Cohere.
One example of a Sequoia AI investment is Harvey, a service that taps LLMs for legal use, including due diligence. Earlier this year, Sequoia led a $21 million funding round for the company.
Earlier, speaking in a Bloomberg Television interview with Emily Chang, Botha said the bulk of the firm’s investments were in AI even as it remains interested in other areas like health care and defense technology.
He also said that while Sequoia hasn’t seen a gain on its 2021 investment in Instacart, overall that company has done well for Sequoia, which has been involved in it for a decade. Instacart debuted on public markets last week as Maplebear Inc. at a fraction of its $39 billion valuation in that 2021 funding round.
Botha said it was “still early days” to judge Elon Musk’s X, the company formerly known as Twitter that Sequoia helped take private last year. He praised moves such as X’s changed cost structure, reinvention of business model, and content-moderation transparency.
--With assistance from Emily Chang.
(Updates with additional details the third paragraph)
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