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I believe that most funds are structured in a way that the VCs have to pass the proceedings (minus their cut of course) to their LPs (investors).

Correct. However many funds do not distribute returns that are less than a certain amount (1.5x is typical, I think)

So in you opinion, assuming that Sequoia had to distribute the "overnight" 2X to their LPs, was that a good investment for them?

I think VCs are looking to provide bigger returns than this.

Thanks. I wasn't aware of that.