Sequoia Capital marks down entire $214M FTX stake to zero
Enterprise capital agency Sequoia Capital tweeted out a letter despatched to its companions on Nov. 10 revealing the agency had marked its $213.5 million investments in FTX and FTX US all the way down to $0, claiming them as an entire loss.
The letter stated that the disaster dealing with FTX has “created a solvency danger” however claimed its publicity to the alternate is “restricted” in its International Development Fund III, the place its value foundation for the FTX portion of the fund totaled $150 million.
Right here is the be aware we despatched to our LPs in GGFIII concerning FTX. pic.twitter.com/Cgp1Yxk1pz
— Sequoia Capital (@sequoia) November 10, 2022
Sequoia additionally reassured its companions that the writing off of FTX wouldn’t have a detrimental impression on the fund, saying it accounted for lower than 3% of the capital dedicated to it, including:
“The $150M loss is offset by ~$7.5B in realized and unrealized positive aspects in the identical fund, so the fund stays in fine condition.”
The enterprise capital agency additionally reported having invested $63.5 million into FTX and FTX US from its Sequoia Capital International Equities Fund. Nonetheless, the holdings represented lower than 1% of the whole portfolio.
Sequoia’s investments into the now cash-strapped cryptocurrency alternate got here as a part of FTX’s $900 million Collection B funding spherical in July 2021 — which was the most important crypto funding ever recorded on the time.
As for the funding resolution, Sequoia reassured its companions that it extensively researches every funding with thorough diligence, and FTX was no completely different:
“On the time of our funding in FTX, we ran a rigorous due diligence course of. In 2021, the yr of our funding, FTX generated roughly $1B in income and greater than $250M in working earnings.”
“We’re within the enterprise of taking danger. Some investments will shock to the upside, and a few will shock to the draw back,” the letter defined.
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Sequoia added that it will talk its subsequent actions to its companions when extra info turns into accessible.
Sequoia Capital presently has about $85 billion of property underneath administration and has beforehand made early investments in tech giants Apple and Google and, extra lately, Airbnb.
