Sequoia Capital marks down entire $214M FTX stake to zero


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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 mentioned that the disaster dealing with 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.

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 positive factors in the identical fund, so the fund stays in fine condition.”

The enterprise capital agency additionally reported to have 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 Series B investment round in July 2021 — which was the biggest crypto funding ever recorded on the time.

As for the funding choice, Sequoia reassured its companions that it extensively researches each funding with thorough diligence, and FTX was no completely 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.

Associated: Breaking: FTX’s Binance rescue deal falls apart in less than 48 hours

Sequoia added that it could talk its subsequent actions to its companions when extra info turns into out there.

Sequoia Capital presently has about $85 billion of belongings below administration, and has beforehand made early investments in tech giants Apple and Google and extra not too long ago Airbnb.