The AI Rush Could Shake Up Venture Capital's Ranks

We probably all know by now that artificial intelligence, particularly generative AI, is venture capital’s current obsession. What’s interesting, though, is that firms like Spark Capital and Greylock Partners, respectable outfits but generally not considered in the same league as Sequoia Capital or Benchmark, have led the industry’s latest push into the sector. Successful bets could propel them to VC’s upper echelons. 

Not that Sequoia has been absent from the latest chapter of the AI wars: It just made an investment in legal startup Harvey AI at a valuation of $150 million, according to Insider. And its partners have made their interest in generative AI known. But they’ve put far less firepower behind the industry lately compared to Spark, for instance, which this year has led massive investments in OpenAI competitors Anthropic and Adept AI Labs. Spark even hired OpenAI’s former head of product to help lead AI investments, as I reported this morning. 

What’s going on? One interpretation is that Sequoia, burned by its adventures in crypto, wants to demonstrate to its limited partners that it has learned its lesson. Recall that it hasn’t even been two years since Sequoia, in December 2021, briefly changed its Twitter bio to this: “We help the daring build legendary DAOs from idea to token airdrops.” That year, the firm did at least 10 crypto deals and unquestionably developed a bad case of crypto fever. Then in 2022, its star crypto portfolio company, FTX, blew up, and Sequoia had to apologize to its LPs, a rare show of remorse from VC’s crown jewel.