Mercor’s Brendan Foody accuses Sequoia of 'dual-pricing' valuation tricks

Founders and former founders recently took to X to air complaints about venture capital behavior, from investors falling asleep in pitch meetings to suggestions that a founder fire a co-founder. Brendan Foody, co-founder of AI talent platform Mercor — last valued at $10 billion — went further, accusing Sequoia of what he called the “sequoia scam,” alleging the firm routinely invests in two tranches and lets founders present only the higher headline valuation to employees and angels.

The tactic Foody describes involves a lead investor putting the bulk of its capital in at a lower, preferential valuation while adding a much smaller amount at a much higher price, creating an inflated headline valuation. That gap between perception and reality has appeared in prior deals: when the AI helpdesk startup Serval announced a $75 million Series B at a $1 billion valuation, days earlier it had been valued at less than $400 million in a Series A extension.

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