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 right down to $0, claiming them as a whole loss.
The letter mentioned that the disaster going through FTX has “created a solvency danger” however claimed its publicity to the alternate is “restricted” in its World Development Fund III, the place its price 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 affect 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 beneficial properties in the identical fund, so the fund stays in good condition.”
The enterprise capital agency additionally reported to have invested $63.5 million into FTX and FTX US from its Sequoia Capital World Equities Fund, nonetheless, the holdings represented lower than 1% of your complete portfolio.
Sequoia’s investments into the now cash-strapped cryptocurrency alternate got here as a part of FTX’s $900 million Sequence B funding spherical in July 2021 — which was the most important crypto funding ever recorded on the time.
As for the funding determination, Sequoia reassured its companions that it extensively researches each 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 yr of our funding, FTX generated roughly $1B in income and greater than $250M in working revenue.”
“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 data turns into accessible.
Sequoia Capital at the moment has about $85 billion of property below administration, and has beforehand made early investments in tech giants Apple and Google and extra lately Airbnb.
