We’re always suspicious of companies that don’t have venture capital (VC) backing. That’s because companies that get funded by VCs have undergone a lengthy vetting process that serves to weed out – using a battle-hardened, repeatable process – startups that don’t have the potential to hit home-runs for investors. Even with proper VC vetting, only one out of ten startups will actually undergo a liquidity event that produces the oversized returns that VCs are expected to show their investors. One VC firm with a lengthy track record of unearthing success stories is Sequoia Capital.
Over the past 47 years, Sequoia Capital has been partnering with founders who now represent more than $3.3 trillion dollars’ worth of publicly traded market cap. (To put that number in perspective, the combined market cap of all +3,300 companies on the NASDAQ is only around $10 trillion.) Between 2009 and 2017, Sequoia had 19 exits, nine of which they invested early-stage (investing earlier can mean exponentially higher returns.)
The main man over at Sequoia is a Welsh journalist turned venture capitalist, Michael Moritz, who often gets berated for speaking his mind. In January of last year, he was accused of “comparing Silicon Valley unfavorably to China” and “publicly dismissing today’s employees in Silicon Valley.” Not even a year later, the tune changed when another Sequoia investor, Doug Leone talked about how “ruthless” Chinese entrepreneurs are and that “they’re putting in a whole lot more hours.” The same publication that criticized Moritz took a step back stating “Silicon Valley’s demise may not be just as a result of increased costs of living or investors overlooking talent in other geographies. It may be because of heightened competition abroad.” Maybe those people with a demonstrated track record of investing in the world’s most successful startups – including global hot spots like China, India, and Israel – know exactly what they’re talking about. That’s why when Sequoia said one of their fastest growing companies is a weight loss app called Noom, we decided to take a closer look.