Sequoia Capital records $213.5 million loss on FTX investments

The venture capital firm Sequoia Capital assured investors that it had not been harmed by the collapse of FTX, while also acknowledging that its investments in the crypto exchange were written down.

Here is the note we sent to our LPs in GGFIII regarding FTX. pic.twitter.com/Cgp1Yxk1pz

— Sequoia Capital (@sequoia) November 10, 2022

In a letter to its limited partners, the firm said the incident’s impact on its business was modest, and losses were offset by billions of dollars of profits.

Sequoia noted that it invested $150 million in FTX.com and FTX.us through the Global Growth III fund, which accounted for 3% of the portfolio of the structure. By size, the position was not among the top 10.

«A loss of $150 million is offset by approximately $7.5 billion of realised and unrealised gains in the same fund, so it remains in good shape», the company emphasised.

Separate investments in FTX totaling $63.5 million were made by SCGE Funds, which as of September 30, 2022 represented less than 1% of its portfolio.

According to the statement, when the company invested in the exchange in 2021, FTX generated about $1 billion in revenue and more than $250 million in operating profit.

«We manage risk. Some investments will surprise on the upside, while others will on the downside. We do not take this responsibility lightly and conduct extensive research and thorough due diligence on all of our investments», the Sequoia statement said.

FTX also counts SoftBank, Temasek Holdings, BlackRock, the Ontario Pension Fund, Paradigm, Tiger Global and others.

Funding overview pic.twitter.com/wZP6If6OtK

— Frank Chaparro (@fintechfrank) November 9, 2022

In July 2021, Sequoia backed FTX in a record-for-the-industry Series B financing round of $900 million.

In October the company participated in a Series B-1 for $420.69 million. FTX’s valuation stood at $25 billion.

In January 2022, the U.S. arm of FTX closed a Series A financing round for $400 million. At the same time, the exchange announced a raise of a similar amount in a Series C. FTX’s valuation rose to $32 billion.

Earlier reports indicated that in September the crypto company planned to raise $1 billion. The first rumours about such intentions by FTX emerged in July.

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