TL;DR: Sequoia Capital just posted a memo titled “The Sequoia of Tomorrow” that undoes roughly 20 years of expansion in one move. The firm is closing its London office, killing its Arc accelerator, shutting down the Scouts program that helped it find Uber and Stripe, and flattening a partnership structure it spent two decades building out. It raised about $10 billion in new funds in the same breath, so this isn’t a firm in trouble. It’s a firm deciding bigger wasn’t actually better.
The memo went up on X Wednesday morning, signed by seven people on behalf of “Team Sequoia.” Two days later, a follow-up piece zeroed in on just the Scouts decision, arguing it was the single most telling part of the whole announcement. Reading both together, that argument holds up.
Scouts built half of Sequoia’s biggest wins
The Scouts program launched around 2009 and it worked almost embarrassingly well for a while. Small checks, written by founders and operators on Sequoia’s behalf, found deals the partners themselves never would have seen. Jason Calacanis pointed Sequoia to Uber through it. Sam Altman brought Stripe in as a scout, years before anyone needed to be told who Sam Altman was. Brian Chesky, Arash Ferdowsi, and Drew Houston were scouts too, back when Airbnb and Dropbox were just two more startups in a crowded field.
That track record is exactly why killing the program lands as such a clear signal. Sequoia isn’t walking away from Scouts because it stopped working. It’s walking away because the firm has apparently decided the model has hit its ceiling, at least in its current form, even while admitting in the memo itself that cutting something which still works “just fine” is scary.
VC Sheel Mohnot didn’t hold back his opinion on X this week.
Scouts “never made sense” to him, Mohnot argued, since scouts don’t care much about the outcomes of the deals they source and firms can still miss good ones anyway, pointing to Sequoia’s own near-miss on Uber as proof.
Not everyone agrees the model is finished. Gabriel Vasquez, a partner at Andreessen Horowitz, told reporters earlier this year that a16z went the opposite direction, trimming its own scout count while giving the remaining scouts bigger budgets and higher expectations, essentially doubling down rather than walking away. Roxanne Varza, who runs Station F and was herself a Sequoia scout from 2020 to 2025, said she was genuinely sad to see the program go and hopes other firms don’t follow Sequoia’s lead. Her read: scouting was a real stepping stone into professional investing and helped build Europe’s early-stage culture specifically, even if “Scouts was just a way to scale the format” in the end.
The memo goes a lot further than Scouts
Scouts is actually the smaller story. The bigger memo, posted two days earlier, lays out a much more sweeping overhaul. London closes, a decision the firm frames around not needing a local office to back European founders, who it says will keep producing outlier companies regardless. The Arc accelerator, Sequoia’s answer to Y Combinator since March 2022, shuts down too. Early-stage and growth teams merge into a single unit. The partnership structure flattens. Even the Monday partner meeting, apparently a fixture of Sequoia life for years, is going away on the theory that founders operate around the clock and the firm should match that rhythm.
Luciana Lixandru, Sequoia’s first Europe-based partner, hired from Accel back in 2020, was offered a move to San Francisco when London closed and turned it down. Her family is in Europe, and she says she’s keeping her partner title, her board seats, and her ability to invest personally in European founders. That’s a notably different outcome than what you’d expect from a firm supposedly pulling back from a region entirely.
This isn’t Sequoia’s first reversal
Context matters here. Sequoia split its China and India operations off in 2023, and those units became HongShan and Peak XV respectively. This is a firm that has shown it’s willing to blow up its own structure when it decides the structure stopped serving the mission. Andreessen Horowitz closed its own London office last year. Coatue did the same back in 2024. Sequoia pulling back from London isn’t an outlier decision in the current VC climate. It’s catching up to where a couple of its biggest rivals already landed.
There’s also a leadership story buried in all of this. Roelof Botha was voted out as senior steward last fall, cut ties with Sequoia entirely over the summer, and joined SpaceX’s board around the same time. Jess Lee, who oversaw Arc and was Sequoia’s first female partner, is no longer listed on the investor page at all and now shows up as an operator and chief product officer instead. Stephanie Zhan left last month to start her own firm. Add it up and this memo reads less like a tidy strategic pivot and more like the tail end of a longer, messier power struggle that’s been playing out inside the firm for over a year.
Quality, not scale, according to the memo
Sequoia’s own stated goal is putting more energy behind fewer people and fewer things, which is basically an admission that the firm spent the last two decades getting spread thin across too many programs, too many geographies, and too many layers of internal hierarchy. The firm isn’t claiming it won’t fund European founders anymore, but reading the memo in full, the message is pretty clearly that the center of gravity is heading back to the Bay Area, full stop, regardless of how the press release phrases it.
It’s also worth connecting this to just how capital-hungry the AI side of the portfolio has become for firms like Sequoia. Our look at Google’s rescue of Crusoe’s stalled Wyoming data center project is a good example of how much money and attention gigawatt-scale AI infrastructure now soaks up, leaving less bandwidth for firms to run sprawling side programs like Scouts and Arc at the same time.
The bottom line
Watching the firm that basically invented the modern scout program decide it’s no longer worth running tells you something about where venture capital is heading, especially with the capital intensity of the current AI investment cycle eating into how firms want to allocate their attention. When the biggest names in the industry start consolidating instead of expanding, that’s usually a sign the easy money phase of a cycle is ending, not a sign that any single firm made a bad call.
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