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 a whole loss.
The letter stated that the disaster going through FTX has “created a solvency danger” however claimed its publicity to the change 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 notice we despatched to our LPs in GGFIII relating to 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 influence 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 good points in the identical fund, so the fund stays in good 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 your entire portfolio.
Sequoia’s investments into the now cash-strapped cryptocurrency change got here as a part of FTX’s $900 million Sequence B funding spherical in July 2021 — which was the biggest 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 totally different:
“On the time of our funding in FTX, we ran a rigorous due diligence course of. In 2021, the 12 months 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 obtainable.
Sequoia Capital at present has about $85 billion of property below administration and has beforehand made early investments in tech giants Apple and Google and, extra just lately, Airbnb.
