Every year, there are only a limited number of Venture Capital (VC) firms that do very well. In 2009, Sequoia Capital had a tremendous year in terms of total capital returned to their LPs (Limited Partners) aka Investors. They had five exits of significant value (one IPO, four acquisitions). Given that Sequoia Capital is an early stage VC firm, I am assuming they had at least 15% ownership in the following companies.
- Company Name – amount of exit – round of investment – date of initial investment
- AdMob – acquired by Google for $750M – Series A investor – 09/2006
- Jajah – acquired by Telefonica for $200M – Series A investor – 03/2006
- A123 – IPO – raised $380M – $2.3B market cap as of 12/28/2009 – Series A investor – 11/2005
- Zappos – acquired by Amazon for $1.2B – growth stage round – 10/2004
- Pure Digital – acquired by Cisco for $590M – growth stage round – 5/2007
In total, $3.12B was generated via these five exits. Assuming Sequoia had 15% ownership that is $590M generated to their LPs. These returns will likely be attributed to two Sequoia funds (both are U.S. focused): $445M fund XII that was raised in 2006. and $395M fund XI that was raised in 2003, so $840M raised via both funds. So with five investments, Sequoia was able to return 70% of these two funds. In addition to these five investments, there are several other Sequoia portfolio companies that are likely to have significant exits including: CafePress, LinkedIn, Kayak, Meebo, Sugar, RockYou, Stardoll, etc. It is highly likely that Sequoia Capital will be able to provide a 2X return to their LPs for both funds. This is very noteworthy as many funds that were raised in 2003 and 2006 will likely return less than 2X of the funds raised to their LPs.
Other firms that had a good 2009 in terms of significant exits include: Accel Partners (SpringSource, Admob, Playfish) and Benchmark Capital (SpringSource, Pure Digital, Mint, FriendFeed). Do you agree with Sequoia Capital having the best year or is there another VC firm that you think had a better year?
All of the above mentioned information was sourced though various publicly accessable websites and articles including:
http://www.accessmylibrary.com/article-1G1-107042246/cautiously-optimistic-vc-fund.html
http://www.redherring.com/Home/14294
http://vator.tv/news/show/2009-12-22-sequoia-raising-1-billion-umbrella-fund
http://www.slideshare.net/eldon/sequoia-capital-on-startups-and-the-economic-downturn-presentation
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