The heavyweight US investor that backed Apple and Google in their early years has written off the entire value of its stake in one of Britain’s most promising technology start-ups.
The move by Sequoia Capital to slash the value of its stake in semiconductor company Graphcore to zero, will be seen as a blow to the wider UK tech sector.
The Bristol-based start-up, which develops computer processors focused on artificial intelligence, has been one of Britain’s big tech hopes. It had aimed for a float valuing it at billions of pounds. It was founded by tech veterans Nigel Toon and Simon Knowles in 2016 after being spun out of Xmos, the semiconductor company. Over the next five years, it raised more than $700 million from big-name backers. It earned a $2.8 billion valuation in December 2020 when it raised $222 million.
Since then, tech valuations have slumped and the company has struggled, forcing it to cut staff to preserve cash. Graphcore ended 2021 with $140 million of cash, and a further $187 million in short-term investments. However, it lost $185 million that year on revenues of only $5 million, implying another fundraise would be needed. Baillie Gifford’s Schiehallion fund has cut its valuation of Graphcore from $3.4 billion a year ago to $1.7 billion and Schroder British Opportunities Trust cut its valuation by 25 per cent in its latest revaluation. Graphcore declined to comment on Sequoia’s writedown, but said: “The scale of the AI computer opportunity remains huge and Graphcore is well placed to be a leading player.” Sequoia declined to comment.