SA国际传媒

Editor鈥檚 note: This is part of a series in which we interview active investors in artificial intelligence. Previous interviews were with investors at General Catalyst, Bessemer Venture Partners, Accel, Insight Partners and Index Ventures.听

A year ago, about 16% of 鈥檚 new investments were in artificial intelligence startups. So far in 2023, that number has jumped to nearly 60%.

鈥淎I has brought new life to the investing ecosystem in the last year,鈥� said , a partner at the firm who invests in seed and early-stage companies.

SA国际传媒 News spoke with Zhan about Sequoia鈥檚 AI investments, .

Investing early

鈥淲e’ve seen more creation and formation of new AI companies,鈥� said Zhan on the firm’s strategy to follow developers and talent. 鈥淲e’ve seen the rise in early-stage AI investing 鈥� most notably, pre-seed and seed-stage AI companies that we鈥檙e actively investing in right now.鈥�

鈥淓very company will have some kind of AI angle around it, and it won’t be seen as an AI company,鈥� Zhan said. 鈥淚t will be seen as a company solving a particular domain or problem space that they’re focused on, with AI as an accelerator.鈥�

AI in the Valley

Zhan has enjoyed a front-row seat to early developments in AI. While studying computer science at , she was advised by , co-founder at Brain, adjunct professor at Stanford, and the current CEO and founder of .

While a student, computer vision and self-driving cars were at the forefront of the industry, she said. , where she worked in product development, acquired , which had image detection technology to 鈥渋dentify the cat on the dropcam.鈥�

Zhan joined Sequoia in 2015, the year was founded. At the time, OpenAI rented office space from Sequoia above in San Francisco鈥檚 Mission District. She followed the startup鈥檚 research, tracking AI鈥檚 possibilities beyond computer vision.

Sequoia made a growth investment in OpenAI in 2021.

In 2015, it seemed AGI (artificial general intelligence) 鈥� a hypothetical form of artificial intelligence with human-like cognitive abilities 鈥� wouldn鈥檛 be possible in the span of our lifetimes, Zhan said. Now, with the advent of large language models and ever-more advanced AI systems, AGI at least seems within striking distance.

鈥淭here are interesting areas of innovation beyond the current transformer architecture,鈥� Zhan said. 鈥淲ill there be players who do the same thing, but for other very specific domains?鈥� To that end, the Sequoia team has seen companies focused on audio, multimodal inputs and biology.

Zhan is also excited by open-source initiatives such as LLaMA, the large language model owned by , and the company鈥檚 Code Llama tool for coding assistance 鈥� both comparable alternatives to OpenAI鈥檚 GPT-4.

Sequoia in AI

Sequoia says it has around , with 17 of those still in stealth. These span from seed to public companies across all industries from semiconductors 鈥� is a portfolio company from the 1990s聽 鈥� to biotechnology, robotics to autonomous vehicles, and creation to collaboration tools.

The firm鈥檚 2023 announced AI investments include , AI technology for legal teams; AI assistant ; and , a cloud technology to help developers run machine models important for the open-source movement.

Other notable investments the firm has made in recent years include backing generative video producer , , which operates a hub for building art models, and , which offers an AI workplace search product that allows employees to search across their company鈥檚 apps.

Zhan noted Sequoia was also an early investor in , co-leading its Series A in 1999. In 2011, Google founded Google Brain, its AI research effort, which was acquired by U.K.-based in 2014. The company authored the transformer model, which revolutionized the output of large language models and ultimately led to the rise of generative AI technologies such as .

Shifting tides

Sequoia has made some big changes to its structure in recent years. In November 2021, it announced a change to an evergreen fund model to continue to hold investments in enduring public companies. In retrospect, it was a badly timed strategy shift announced within months of an extended downturn in technology stocks.

However, in an interview with SA国际传媒 News in early 2021, Sequoia partner noted how 鈥減atient鈥� the firm is with distributions, often waiting years after a company has gone public to distribute.

The new structure codified this practice of maintaining stakes in 鈥�… these handful of companies that really surprised you to the upside,鈥� he said then, citing the tens to hundreds of billions of dollars in value creation by public technology companies , , , , and Google 鈥� all Sequoia portfolio companies.

In June of this year, amid rising U.S.-China tensions, the firm announced its split into three separate firms for China, South East Asia and its Europe/U.S. business.

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Editor’s note: This article was updated on Oct. 23, 2023, with several clarifications, including the timing of Sequoia’s investment in Replicate as well as the nature of the firm’s split into three businesses and its public company holdings.

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