Sequoia Capital Lost $214 Million On Its Investment in FTX
Sequoia Capital, one of the largest venture capitalist company has announced about their position in their investments in FTX. With the problems going on with FTX, many investors are also worried about what is going to happen to their investments, and Sequoia Capital has released a letter about their investment.
According to a letter sent to its limited partners, Sequoia Capital has marked all its investments in FTX from $214 Million down to zero.
The Exposure is Limited
As Sequoia wrote on the firm’s Twitter page, the firm’s exposure to FTX is limited, and all losses have been offset by billions of dollars in gains.
“The $150 million loss is offset by the approximately $7.5 billion in realized and unrealized gains in the same fund, so the fund remains in good shape,” cited the Tweet.
Here is the note we sent to our LPs in GGFIII regarding FTX. pic.twitter.com/Cgp1Yxk1pz
— Sequoia Capital (@sequoia) November 10, 2022
According to Sequoia, its Global Growth III fund invested $150 million in FTX.com and FTX.us and its SCGE Fund invested $63.5 million in the exchange and its U.S division.
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The fund’s Global Growth III investments make up 3%, while its SCGE investments make up less than 1%.
“Separately, SCGE Fund, L.P. invested $63.5 million in FTX.com and FTX US, representing less than 1% of the SCGE Funds 9/30/2022 portfolio (at fair value).”
Operating in the risky business
The letter stated that they conducted a rigorous diligence process when they invested in FTX, and that “In 2021, the year of our investment, FTX generated approximately $1 billion in revenue and more than $250 million in operating incoming, as was made public in August 2022.”
Meanwhile, Softbank, Temasek Holdings, the Ontario Teachers’ Pension Plan, Race Capital, and Lightspeed Venture Partners are some of FTX’s investors.
“We are in the business of taking risk. Some investments will surprise to the upside, and some will surprise to the downside. We do not take this responsibility lightly and do extensive research and thorough due diligence on every investment we make,” Sequoia wrote.
Read More: Sam Bankman-Fried Not Giving Up On FTX Through Leaked Slack Message
The letter received various responses from the crypto community, including Rohin Dharmakumar, a journalist and CEO of The Ken, an Indian business news platform, saying “ Sequoia to its investors: yeah we may lose about $210M if FTX goes down. No big deal. Also Sequoia, *on its own website*: so thrilled we invested all that money after a pitch when the founder was gaming on his laptop while we were in rapture.”
One Twitter user said, “ Sequoia is one of the premier VC firms in the world, with net assets >$85B and have funded notable companies early such as @Apple, @Google, @instagram. You can consider FTX bankrupt if they are marking their position at zero.”
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