Since last summer, the investment juggernaut has cut the size of its firm, two of its funds, and begun severing ties with its international entities in China and India. These events may not all necessarily be related, but they are still significant changes for a major venture capital firm, and unusual within such a short period of time. 

Late last week the Wall Street Journal reported that Sequoia had, back in March, cut the size of its fund of funds by half and its cryptocurrency fund by nearly two-thirds. 

“We made these changes to sharpen our focus on seed-stage opportunities and to provide liquidity to our limited partners,” a Sequoia spokeswoman said in a statement to Fortune, noting how the firm had “distributed more than we’ve called in capital” in the past decade. The crypto fund, in particular, will “primarily focus on new company formation, with the opportunity to supplement these investments from our seed, venture, growth, and expansion funds as the companies mature,” she said. 

The fund changes are a significant move for Sequoia that underscores just how much the times have changed for venture. Reducing the size of a fund also means recomputing management fees, and therefore handing money back to limited partners. In January, one of Sequoia’s partners said the firm had already lowered management fees on those two funds—allowing LPs to pay fees based on capital deployed, rather than assets under management.

Downsizing funds is not something many venture capital or private equity firms will readily do, though it happened on several occasions during the downturn two decades ago. And in 2008, we saw some buyout funds and hedge funds move money out of main funds into “side pockets”—essentially side funds that didn’t charge management fees—giving themselves more time to deploy the capital without charging their LPs anything additional for it.

Sequoia’s decision to trim down two of its funds “may be a signal to say: We take our responsibility…We recognize that the market has shifted and it’s not just temporary,” says Cyril Demaria, an affiliate professor at EDHEC and author of Asset Allocation and Private Markets. He suggests limited partners may appreciate the move. Though some investors have been critical of firms that return money to limited partners.  

You may recall something else, as was reported in The Information earlier this year, that Sequoia had told its limited partners in March that they could break their two-year lockup rule and withdraw capital earlier than normal, in an effort to help its investors with some of their liquidity issues.

This certainly isn’t 2021 anymore, when it seemed easy for firms to pull in billions of new capital, and investors had little issue finding places to spend it. This is the year that Y Combinator cuts its growth team and Insight Partners reels back its fundraising target by billions. For Sequoia, add the blowup of its high-profile portfolio company, crypto exchange FTX, or the departure of legendary Mike Moritz, who had been with the firm nearly 40 years before saying he was stepping back this year, and this has made for a difficult year for one of the most important venture capital firms in Silicon Valley.

But don’t expect permanent damage, according to Demaria. Sequoia “might have some sort of hiccups along the road…But I would assume that if they raise money, there will still be a queue in front of the door.”

See you tomorrow,

Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
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Jackson Fordyce curated the deals section of today’s newsletter.

VENTURE DEALS

- Octave Bioscience, a Menlo Park, Calif.-based multiple sclerosis and other neurodegenerative diseases precision care company, raised $30 million in Series B extension funding. Novartis, Hikma Ventures, Intermountain Ventures, The Blue Venture Fund, Echo Health Ventures, Section 32, Northpond Ventures, and others invested in the round. 

- SuperFi, a London-based debt prevention platform, raised $1 million in pre-seed funding. Ascension and Fair By Design co-led the round and were joined by Force Over Mass and others.

PRIVATE EQUITY

- TopBuild agreed to acquire Specialty Products & Insulation, a Charlotte, N.C.-based insulation and building materials provider, from Incline Equity Partners. The deal is valued at $960 million.

- Bluestone Equity Partners acquired a minority stake in PMY Group, a Melbourne, Australia-based venue, events, and infrastructure technology solutions firm. Financial terms were not disclosed.

OTHER

- Biogen agreed to acquire Reata Pharmaceuticals, a Plano, Texas-based rare disease treatments company, for $7.3 billion, including debt.

- OAG acquired Infare, a Copenhagen-based air travel data provider, from Ventiga Capital. The deal values the combined companies at over $500 million.

FUNDS + FUNDS OF FUNDS

- Goodwater, a Burlingame, Calif.-based venture capital firm, raised $1 billion across two funds. Roughly 60% of the fund will focus on early-stage consumer tech investments and 40% on growth-stage investments.

PEOPLE

- Bluestein Ventures, a Chicago-based investment firm, promoted Amira Khatib to vice president. 

- Southfield Capital, a Greenwich, Conn.-based private equity firm, promoted Brandon Pinderhughes to partner.