Startup success stories and investors in them. WhatsApp and Sequoia Capital

When Facebook (banned in the Russian Federation) acquired WhatsApp for $22 billion in 2014, it was at the time the company's largest venture-backed acquisition. It was also a big win for Sequoia Capital, the company's only venture capital investor, which turned its $60 million investment into $3 billion.

#VENTURE

#INVEST

#ВЕНЧУР

5000%

total yield

Yield:

The total is invested:

Share in the company after the IPO:

$60 million

over $3 billion

The recipe for success for Sequoia Capital in this deal was an exclusive partnership with WhatsApp founders Brian Eckton and Ian Koum. Usually, when venture capitalists invest in a company, they want to attract additional investors to generate more excitement and bolster their confidence in success. A different approach was taken here - Sequoia was the only investor in the $8 million A round in 2011, after which the company was valued at $80 million.
Sequoia was the only investor in the subsequent Series B round as well, investing an additional $52 million at a valuation of $1.5 billion. It paid off. By the time Facebook (banned in Russia) acquired WhatsApp for $22 billion, Sequoia had invested a total of $60 million, owning about 18% of the company. Thus, Sequoia Capital's stake was worth more than $3 billion at the time of the deal, yielding a return of 5000%.

Sequoia Capital has consistently stated its confidence in WhatsApp's bright future while remaining an exclusive investor even though the app has scaled to hundreds of millions of users with little revenue. This approach provides more ownership and returns, but also carries greater risks.