In certain respects, it doesn't matter if it's a bubble. Sequoia's job is to allocate funds across the tech industry. Simply by giving them money to invest, the

In certain respects, it doesn't matter if it's a bubble. Sequoia's job is to allocate funds across the tech industry. Simply by giving them money to invest, their LPs accept the risk of systemic issues that could result in the entire tech industry crashing. In part this is allowed by the fact that most LPs diversify their funds, so they're not completely vulnerable to problems in a single sector. It's also because funds are rarely judged against absolute return; they're judged against benchmarks. If the entire market falls by 10%, and a fund only falls by 8%, then they're still doing well relative to their benchmarks. But what's more important to Sequoia is not missing out on returns. LPs aren't investing so that Sequoia will keep them from losing money. If that were their primary goal they would just invest in CDs or government bonds. They're investing with Sequoia so they don't miss out on the upside. And if that's the priority, and Sequoia's competitors have far more money to allocate (see SoftBank with their $100 billion fund), then Sequoia also needs more money to allocate to stay competitive.