A storied financier of startups expands — but its new businesses have yet to take root.

A year ago, when venture capital firm Sequoia Capital ordered its portfolio companies to slash costs in the face of a sick economy, even healthy businesses, such as LinkedIn and Zappos.com, complied.

As word of the edict spread, many non-Sequoia startups also trimmed their budgets — a testament to the venture firm's influence in Silicon Valley and beyond. In its 35 years in business Sequoia had nurtured the likes of Atari, Apple (AAPL), Cisco (CSCO), Yahoo (YHOO), and Google (GOOG). If it was bracing for the worst, the situation must be serious.

But just as Sequoia was commanding its upstarts to contract, the firm was plotting an ambitious expansion of its own. Throughout 2008 and into this year Sequoia tried entering entirely new businesses, hiring professional investors to build a hedge fund, as well as an asset-management group that would mimic the wealth-preservation approach popularized by major university endowments. More

Alec Baldwin promotes Hulu in traditional TV spots.

The Web video shakeout has begun. Hulu, a venture of NBC, ABC, and Fox, is growing nicely, aided in part by a slick marketing campaign using, of all things, television ads starring Alec Baldwin. But a slew of smaller sites are starting to reformulate their strategies in the hope of surviving.

Joost, which was started by the founders of Skype Technologies, recently announced it would reinvent itself as a wholesale technology provider for media companies to publish video. The New York City–based outfit was launched amid great expectations in 2006 with $45 million in funding.

Video-sharing site Veoh may also be in trouble. High-profile backers, including ex-Disney (DIS) CEO Michael Eisner and Goldman Sachs (GS), have sunk $99 million into the New York–based site since its 2005 launch. In addition to the usual startups costs, Veoh has been hobbled by an expensive court battle with Vivendi's Universal Music Group over alleged copyright violations.

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