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October 9, 2006
Sevin Rosen? Meet Sequoia
Sevin Rosen folks need to go down Sand Hill and meet their counterparts at Sequoia. While the former venture firm is bemoaning the end of venture, the partners (and investors) at Sequoia are about to share in that firm's 30% stake in soon-to-be purchased YouTube. A $495-million gain in nineteen months on a $11.5-million investment sure generates a spiffy return.Total invested: $11.5m (over two rounds: 11/2005, and 4/2006)
Percentage ownership: 30%
Value of Google shares, post-acquisition: $495m
Multiple: 35.2
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They own much more than 30%. Sequoia did the first two rounds solo. I would bet huge money the first round was 35% to 40% and the second was much more modest. Maybe an additional 5-10 pts. So my guess is more like 45% ownership. But it might have been 60%. Unlike Google there was no angel investor around to save these boys from the smiling sharks at Sequoia.
congrats to sequoia, of course, but one good apple don't save the whole bunch, doc. google paying up for youtube can't even put a small dent in the oversupply of VC, and the undersupply of returns. and yes, it is that simple...
Turns out there might be quite a bit more to the story at Sevin Rosen than first came out. Dan Primack is suggesting that they pulled a snow job on the New York Times:
http://texasvc.weblogswork.com/2006/10/14/dallas-vc-caught-in-snow-job/
I don't know if Chad Hurley ever asked Sevin Rosen for funding, but if they did I am sure their response was: "We don't invest in web 2.0 thingamajigs"