I wonder if selling, perhaps at a discount, to a relatively passive secondary buyer like Industry Ventures would have been an option?
And if you think in 10+ year time horizons, honor is truly a more valuable asset than cash
This would not only raise eyebrows, but eventually the truth will come out. Put yourself in the shoes of a buyer, if you were buying out Sequoia's shares and after a few weeks/months news came out that they only sold their shares because of this. Not only that, but that Finix is pretty much competing with Stripe, which they have no chance of succeeding at, it would tarnish Sequoia's reputation and also open them up to litigation. As someone else in this thread pointed, $21 Million is a rounding error for them.
Why would this be kept a secret? Why doesn't Sequoia, upon realizing their conflict of interest, say "Attention everyone: we have to sell this investment for conflict-of-interest reasons. We can't reasonably give you our board seat and other influence, just the financial state, so we will sell it for a large discount."
Why would any of that tarnish Sequoia's reputation or open them up to litigation? (I mean, other than the minor reputational hit they have already taken for not doing thorough due diligence, which is being revealed regardless.)
There might be a lot of reasons, and I am sure there would have weighed all their options and gone with this decision.
Plus, if it was at a discount, it immediately makes the stock feel "cheap". Doesn't matter what the reasoning is, it'll just feel devalued to everyone involved.
(It doesn't make much sense to me that selling under these circumstances makes the stock feel cheap while throwing the stock in the trash bin doesn't. But I'll take your word on the psychology.)