Sequoia Capital is seeking to close a schism between its past and present leaders, after an extraordinary boardroom battle involving Silicon Valley’s most storied venture firm and its former boss Michael Moritz.
This week, Sequoia partner Matthew Miller left the board of Swedish fintech company Klarna, after a failed attempt to unseat its chair Moritz, a near 40-year Sequoia veteran who led the firm’s bets on Google, PayPal as well as Klarna.
The effort to move against Moritz had the backing of Roelof Botha, Sequoia’s current chief, according to multiple people with direct knowledge of the dispute. Days later, Botha reversed course and backed Moritz.
“It is a complete fiasco,” said one person with knowledge of the incident. “There are questions about Miller and serious questions about Sequoia’s leadership and how they let this happen.”
The fight is a rare public demonstration of tensions at Sequoia, which has painstakingly built a reputation for quiet competence and investing nous. It highlights the challenge faced by Botha as he seeks to build on past successes while carving out his own legacy.
“The continued presence of the old leadership [on start-up boards] communicates to the outside world that they are not confident in the new leadership,” said a Sequoia “limited partner”, a term for one of the financial institutions that has invested in its venture funds. “The magnitude of the egos in the VC world indicate that might be the case here.”
In its more than 50-year history, Sequoia has navigated two leadership transitions: when Moritz and Doug Leone took over from founder Don Valentine in the mid-1990s and again as Botha became leader of the firm in 2022, having managed the US and European operation since 2017.
Botha was hired to Sequoia by Moritz in 2003. He had been a senior member of the team at PayPal, working alongside Peter Thiel, Elon Musk, Max Levchin and Reid Hoffman — a group later dubbed the “PayPal mafia” who went on to become some of Silicon Valley’s most prominent investors and founders.
Since joining Sequoia, Botha has made successful bets on companies including YouTube and document database group MongoDB. “Roelof is a ferociously high-IQ man,” said one person who has worked with him. “He works hard and is convinced of his decisions.”
The 50-year-old South African is also steering Sequoia through the most challenging investment environment for two decades. Last year, Botha played a leading role in the separation of Sequoia’s US and European operations from its Chinese investment arm that had made early investments in Alibaba and TikTok parent ByteDance.
That move, amid pressure from the Biden administration and growing US-China trade tensions, marked a decisive break from Sequoia’s past.
Moritz and Leone had led the firm’s highly successful entry into Asia in the mid-2000s. While Leone remains a Sequoia partner, Moritz gave up active management duties in 2012. He stepped down as a partner last year, shortly after the China separation was announced.
Moritz has since vacated all but one of his Sequoia-affiliated board seats, including at payments company Stripe and online delivery company Instacart.
He retains a strong influence, however. Moritz has kept Sequoia’s board seat at pharmaceutical company Formation Bio, keeping his position because the company was seeking to raise fresh capital, according to a person familiar with the situation.
He has also taken independent board positions at Klarna and Instacart, and is a senior adviser to Sequoia Heritage, a wealth management fund independent from Sequoia Capital.
“In any organisation when you have transition to a new leadership it’s complicated to have the old leaders hanging round,” observed the Sequoia LP.
Sequoia is Klarna’s biggest investor, with a stake worth $1.5bn. Moritz led the first investment in the Swedish start-up in 2010, sealing the deal after the eruption of a volcano in Iceland grounded the investor in London with Klarna boss Sebastian Siemiatkowski.
The two have built a strong relationship and Moritz has been a staunch supporter of Siemiatkowski. One person close to the pair said the attempt to dislodge Moritz as chair could be viewed as “step one to removing Sebastian”.
The spat at Klarna stemmed from a disagreement over the details of the fintech’s corporate governance and its effort to redomicile to the UK, seen as a precursor to the company’s public listing.
Victor Jacobsson, a Klarna co-founder who has left the company but retains a sizeable shareholding and board influence, wanted to retain veto powers over certain company decisions, according to a person with direct knowledge of the dispute.
That put him at odds with Siemiatkowski and Moritz. “Sequoia aligned with Victor,” said a person with direct knowledge of the dispute. “Huge mistake. I think Miller wanted to be a hero. Instead of which he became a patsy.”
Another person with knowledge of the situation refuted that characterisation of the dispute. “Sequoia didn’t align with one specific person — that’s an oversimplification. They proposed a complex solution to a complex problem,” they said. “It was aimed at finding the middle ground.”
Multiple people said personal tension between Miller and Moritz played a role in a breakdown between the pair. Botha and other partners at the firm reviewed Miller’s case and U-turned.
“When the shit was hitting the proverbial fan Roelof stepped in and brokered the peace treaty,” said a person with knowledge of the decision. “Sequoia has egg on its face. I would rather they did that than make a bad business decision.”
Klarna, Sequoia, Miller and Moritz declined to comment. Jacobsson did not respond to requests for comment.
After Miller stepped down, Klarna’s chief executive Siemiatkowski wrote to shareholders asking them to approve the appointment of a new Sequoia partner, Andrew Reed, to fill the vacated seat, according to an email exchange seen by the Financial Times.
Over a decade at Sequoia, Reed, 33, has backed design software start-up Figma, developer platform GitHub and AI video company Loom. He has another important qualification: Moritz’s support.
The pair formed a strong bond, with Moritz offering advice and becoming an occasional cycling companion to the younger man.
In response to Siemiatkowski’s message to shareholders on Wednesday, Moritz wrote Reed “is one of those gifted sorts who pays attention to the smallest details without losing sight of his compass bearing”.
Additional reporting by Akila Quinio in London
