Today is the day for substantial VC returns.
We talked a bit about Sequoia’s coming substantial win with the IPO of game engine Unity today. Now, Sequoia may actually have the 2nd largest return amongst business submitting to go public with the SEC today.
Snowflake filed its S-1 this afternoon, and it looks like Sutter Hill is going to make bank. The long-time VC firm, which invests heavily in the enterprise area and generally keeps a lower media profile, is the huge winner across the board here, bring out an aggregate 20.3% stake in the data management platform, which was last independently valued at $12.4 billion earlier this year. At its last appraisal, Sutter Hill’s complete stake is worth $2.5 billion. My associates Ron Miller and Alex Wilhelm looked a bit of the financialsof the
IPO filing. Sutter Hill has been intimately connected to Snowflake’s early buildout and success, offering a$5 million Series A moneying back in 2012, the year of the business’s founding according to Crunchbase. Now, there are some caveats on that number. Sutter Hill Ventures(aka”the fund”)owns roughly 55%of the company’s total stake, with the balance owned by other entities owned by the company’s management committee members. Michael Speiser, the firm’s partner who sits on Snowflake’s board, owns slightly more than 10%of Sutter Hill’s stake directly himself according to the SEC filing. In addition to Sutter Hill, Sequoia likewise got a large piece of the data computing business: its development fund is listed as having an 8.4 %stake in the coming IPO. That produces two Sequoia Development IPOs today– a nice way
to start the week this Monday afternoon. Altimeter Capital, who did the Series C
owns 14.8 %, ICONIQ owns 13.8%, and Redpoint, who did the Series B, owns 9.0%. To see the breakdown in returns, let’s begin
by taking a look at the business’s share cost and carrying values for each of its rounds of capital: On top of that, what’s intriguing is that Snowflake broke down the share purchases by company for the last 4 rounds (D through G-1)the business fundraised: That level of detail actually enables us to grossly compare the multiples on invested capital for these companies.
Sutter Hill, in spite of owning large sections of the business early on, continued to buy up shares all the way through the Series G, investing an additional $140 million in the later-stage rounds of the business. Adding in the whole of its $5 million Series A round and a bit from the Series B assuming pro rata, the company is searching the order of a 16x return (presuming the IPO price is at least as great as the last round cost).
Outdoors Sutter Hill, Redpoint has the very best numerous return profile, considered that it only invested $60 million in these later-stage rounds while still keeping a 9.0%ownership stake. Both Sutter Hill and Redpoint bought roughly 20%of their total stakes in these later-stage rounds. Doing some roughly computing, Redpoint is looking at a return of about 12-13x. Sequoia’s numerous on investment is capped
a bit considered that it only invested in the most recent funding rounds. Its 8.4%stake was purchased for nearly$272 million, all of which can be found in these late-stage rounds. At Snowflake’s last round valuation of $12.4 billion, Sequoia’s stake is valued at$1.04 billion– a return of a little less than 4x. That’s excellent for mezzanine capital, however nothing like the multiple that Sutter Hill or Redpoint got for investing early. Doing the exact same back-of-the-envelope math and Altimeter is looking at a much better than 6x return, and ICONIQ got 7x. As in the past, if the stock zooms up, those returns will look all the much better( and obviously, if the stock crashes, well …)One last note: The pattern for these last four funding rounds is uncommon for equity capital: Snowflake appears to have”spread the love around,”having multiple companies develop stakes in the start-up over several rounds instead of having one definitive lead. Article curated by RJ Shara from Source. RJ Shara is a Bay Area Radio Host (Radio Jockey) who talks about the startup ecosystem – entrepreneurs, investments, policies and more on her show The Silicon Dreams. The show streams on Radio Zindagi 1170AM on Mondays from 3.30 PM to 4 PM.