Sequoia Capital plans $8B global fund, eyes China investors

It's hard to argue that there is a single company in the S&P 500 which does not use technology as part of doing its core business. The idea that a company is a tech company may not be so useful.

What is your definition of a tech company? Almost every company uses technology in one way or another, but if the breakdown of the S&P is an indication of our true beliefs, then one might say we tend not to categorize them as being in the "tech" sector.

I suppose Netflix is an example of a media company that is also a tech company, but I think over time we will restrict the idea of a tech company to harder tech, like semiconductor fabrication and operating system development.

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.