Context: MUBI is a sort of “Netflix for Indie films”, which recently announced they had taken a $100M investment from Sequoia Capital, a famous Silicon Valley venture capital firm. MUBI’s community was up in arms, with 63 directors criticizing MUBI and its CEO Cakarel for taking an investment from Sequoia over what it calls “genocide profiteering”, citing new investments in Israel during the genocide, as well as investments in Israeli weapons companies. Tech for Palestine has also been vocal about Sequoia partner Shaun Maguire and his support for genocide and Islamophobia.

MUBI CEO Efe Cakarel has released a statement about their investment from Sequoia. Based on our analysis, we believe that Cakarel’s statement contains a significant amount of mistruths and misdirections, including many that Cakarel most likely understood to be untrue. Below we have included the full statement from MUBI, retrieved from Vanity Fair, and fact-checked each claim.

So far so good. No issues.

Cakarel could have chosen this moment to stand up for the values of MUBI’s users by naming Israel as the perpetrator, who is causing the “loss of civilian lives”, the “deliberate targeting of an entire population’s ability to survive”, and the “immense suffering”. Instead, he does not mention Israel once in his entire statement, despite their occupation of Palestine — and MUBI investor Sequoia’s support for it — being the entire reason he had to write this statement. If MUBI fans expected Cakarel to stand up for their values, this is a poor start.

Factcheck: misleading, possibly untrue.

It is misleading to lean on the idea that MUBI’s profits for Sequoia will not benefit other companies in Sequoia’s portfolio. Even when profits are returned to Limited Partners (the investors who provide capital to Sequoia), those investors commonly reinvest with Sequoia. This means the profits can be redirected into any investments Sequoia chooses.

Additionally, Sequoia changed their fund structure in 2021, and now operates a “Forever Fund”. This means the profits from an investment like MUBI does actually go straight back into the fund and not directly to Limited Partners. This means that Sequoia can directly use the profits from MUBI’s exit to directly invest in Israel and in war.

Further, there is an implication here that the only concern here is where the profits will go. It is also concerning to associate oneself, and one’s company, with investors who are supporting a genocide, beyond specifically where the dollars go. Who you work with is where your values are, and Sequoia has made very clear their values in not sanctioning or even making a statement on Shaun Maguire’s Islamophobic attacks, not to mention the timing of their return to investing in Israel.

Sequoia stopped investing in Israel a few years back, and then started investing again in 2024, at which point at least 30,000 Palestinians had been killed by Israel. Sequoia partner Shaun Maguire has been loud in his support for Israel’s war, and spends a significant amount of time supporting it online, including spreading pro-Israel propaganda. This was even before his Islamophobic attack on Mamdani.

Typically, investors will shy away from investing near war, due to the disruption to investor returns from potential sanctions and consumer opinion, disruption to service, and staff being directly involved in war. However, Sequoia opened an office in Israel after the war started, and completed investments in several companies, including weapons company Kela. According to Maguire, they expect to invest in 3-5 Israeli companies per year, with the explicit goal of supporting Israel and the Israeli economy.

Beyond Israel, Sequoia has a history of controversies, including 20-year partner Michael Goguen fired for sexual abuse, Chairman Michael Moritz making misogynistic statements to justify having no female partners at Sequoia, as well as senior partner Doug Leone’s donations to Trump’s campaigns in 2016 and 2024. None of these are aligned with the purported values of MUBI and their customers.

Fact check: Misdirection, misleading While presumably technically true, this is very misleading. Venture firms are made up of dozens of shell companies under one brand. Each time they raise a “fund”, they make a new shell company, and have typically separate shell companies for different funds, and purposes.

However, all of these shell companies are what ultimately make up “Sequoia”.

It seems that Cakarel has worked out a very specific “technically true” statement in an attempt to distance himself from Maguire. However, just because Maguire isn’t technically on the exact bag of money that was used to invest in MUBI - it’s still Sequoia who provided it, and Maguire is a General Partner at Sequoia.

Sequoia is a brand that encompasses many different funds and companies and partners, and what brings them together, for good or bad, is the Sequoia name, brand, and partnership. You cannot split the good and the bad from within a single firm like this.

Fact check: Untruth, misleading

Explanation: Venture firm partners have significant ability to influence your company, even if they’re not directly involved. A VC firm is a partnership, and although only one partner takes a board seat, they will discuss portfolio companies like MUBI in partnership meetings, which are the major way that VC firms make decisions.

A major role of a board is to hold the CEO accountable, and to decide to fire the CEO if necessary. Those discussions will always involve other partners at the firm.

At some point in the future, MUBI may need more money, and existing investors hold significant influence over this in a number of ways. Firstly, a decision into whether Sequoia should invest more money — companies often need to rely on support from existing investors if they hit a bad quarter, which is common, or if the economy changes, and this gives existing investors significant power over the company’s direction. It is extremely common for investors to factor their relationship with founders and CEOs into investment decisions, an informal sort of “editorial control” that Cakarel’s framing ignores.

Secondly, Sequoia’s decision will send a signal to other investors. If Sequoia no longer wants to invest in a company’s next round, other investors are unlikely to want to join. And such investment decisions are made through partnership votes.

An experienced founder and CEO like Cakarel, would typically be aware of the ways investors can influence a company. Thus we rate this higher than misleading, and call it an “untruth”.

Maguire’s views have been public for nearly 2 years, and the company was almost certainly aware of the controversy before they took Sequoia’s investment (if they did not, then they are negligent). Thus, we can surmise that MUBI took Sequoia’s investment despite knowing about Maguire’s views.

Fact check: lie

Sequoia has a board seat at MUBI, giving them real and actual power over the CEO, the company, and the company’s direction. , in a number of different ways.

1. Sequoia partner Andrew Reed sits on the board, and is legally required to exercise this power in many situations, and are legally liable for some company decisions.Sequoia presumably attends quarterly board meetings, where all company decisions are scrutinized. All oversight and authority flows to the top. The CEO has authority over programming, and the board has authority over the CEO.
2. When a VC makes an investment, the company signs an “Investors Rights Agreement”, giving significant power to the investor, which can provide significant leverage.
3. Preferred Shares: On a sale, the investors receive their full investment back before founders and employees receive anything. This establishes different economic outcomes, where for example selling a non-performing company for parts can be beneficial to the investor, but fully destructive to the founders, employees, and customer base.
4. This is before all of the “soft power” that an investor has by being in the rooms where their decisions are made, and being needed to sign off on company decisions. It is not at all unusual for a CEO to be told “ok, but on your head be it” when announcing a plan, with the consequences potentially being the CEO being fired.

Between the ownership, Preferred Shares, board seat, soft power, and the Investor Rights Agreement, Sequoia does in fact have significant leverage over MUBI. Cakarel’s suggestion that his percentage of shares gives him full control over the business is almost certainly false, and it would be shocking if Sequoia signed an investment agreement giving them no power at all.

Sequoia most likely has direct power or soft influence following areas:

• firing and replacing the CEO
• blocking a sale
• forcing a sale
• influencing future investments
• influencing C-suite leadership hiring/firing decisions
• CEO compensation
• influencing bringing on other board members

Each of these gives Sequoia and other investors significant power and influence over “business and curatorial decisions”, as well as “programming, editorial, or financial decisions”.

It is not credible that Sequoia has no power or influence, even in the event that Cakarel has negotiated terms to give him significant power relative to a normal investment (which he likely would have mentioned if this was the case). It is also likely that Cakarel knows this, since he is an experienced CEO who has run MUBI since 2007.

Hence, we believe this statement is a lie.

For those less experienced than Cakarel, I’ve included a footnote to illustrate investor power from my own specific experience below.

Who a company takes money from is what that company stands for. There is no concept of making people rich where they’re not going to use that money for their values, in this case supporting Israel.

We suggest that MUBI adopts the “Principles and Criteria for Ethical Venture Capital Investment” from the Institute for Ethical Venture Capital.

Note that Cakarel is not talking about giving the money back. That’s because it is very hard to get rid of a VC once you have accepted their money. For example, when several investors got #MeToo’d in 2016, those same investors continued to make money from the same founders who they harassed and assaulted.

Founders should consider this lesson: if you take money from Sequoia, you will never ever get rid of them, and their future actions and decisions will remain tied to your company. Investment agreements are iron clad, and they are not company friendly, nor founder friendly. They are investor friendly.

It’s important to see what happened here: investors like Sequoia get real power — board seats, ownership rights, 50-page Investor Rights Agreement documents that the company signs. However, the community is given a powerless “council” which “advises” and is expected to “ensorse” “a policy”. This council and the policy have no power, while Sequoia has actual power.

Cakarel could have given the Artists Advisory Council real power by giving it a board seat, or given them the power to veto new investors, or possibly even the power to review past investments according to the policy and to give back past investments which do not meet them.

It is clear from the description that this Council is merely token representation to seem like MUBI cares, while real power is given to Sequoia.

Analysis

Overall, it seems that this statement is significantly and repeatedly misleading. Cakarel makes several statements which fall into the “technically true but misleading” category, and it feels like those statement were made to deceive his audience, who are unlikely to be aware of the minutia of venture investments.

We believe that MUBI decided to take the Sequoia investment because it suited them for business reasons, and that they did consider that Sequoia well-known reputation mattered to them, particularly around their investments in weapons, and in a country which is committing an internationally recognized genocide, as well as a long-standing apartheid and occupation.

Outcome

It is possible for Sequoia to divest from MUBI, however, this is rare and unlikely, and it is not likely that MUBI and Cakarel do not have the power to force that. The best way to help MUBI remove Sequoia’s investment is to organize a boycott of MUBI, in order to damage their business, forcing Sequoia to make a financial decision to remove themselves.

Example of Investor power

I’d like to share this anecdote about my exit from my company CircleCI, as a potential lesson for MUBI CEO Cakarel.

When I left my company in 2015, it was because an investor (not Sequoia) pushed me out via soft power. At this point, I had total control of the board, with 2 seats to their 1 seat, and could not be fired. I also owned a pretty sizable chunk of the company.

18 months after their investment, the board director sat me down to say that the company had not achieved the milestones they had hoped for, and that if I did not fix it, they would “not be able to support the company going forward”. This means they would not provide additional capital, and this would send a signal to other investors, essentially making the company uninvestable. As we were losing money — something all growing startups do, by design — we had no option.

The investor brought on a new CEO (who got a board seat), and convinced me to give one of my board seats to the new CTO. Then, through successive rounds of funding (and some secondary sales), my ownership diluted to around 3%. All this before I spoke up for Palestine.

When I spoke up for Palestine in 2023, I no longer controlled the majority of “common” shares, and so the CEO, livid at the commotion directed at him during an important fundraise, arranged for me to be removed from the board. This was, as far as I can tell, due to the request of an investor from whom the CEO was trying to raise money.

To Cakarel, if you think Sequoia does not control you, you are mistaken or naive. In fact, in my founder communities in San Francisco, we were repeatedly warned about taking money from Sequoia, as they have a reputation for pushing companies to unsustainable growth and forcing the sales of companies which do not deliver.