In this case, the truth is that the company had three rounds of financing, with Sequoia as the sole investor. According to documents unearthed by VC Experts, WhatsApp went from a $250k seed round in 2009 to an $8 million round at an ~$80 million valuation in 2011.
The final round, which we reported as a Series C here but was actually technically a Series B, was a $52 million round back in July 2013, at a ~$1.5 billion valuation.
Guess the news that Facebook was interested in scooping up the simple messaging app, as well as its exponentially expanding userbase (around 200 million at the time of this investment), drove the company’s worth up a couple of orders of magnitude.
The filings add up to the $60 million we previously reported, with Sequoia eventually owning around 20 percent of WhatsApp (we’ve heard “high teens”). Its stake is now worth about $3 billion in cash and stock, around a 50x return on its investment in the company.
What is most interesting about the filing is that the B is a participating preferred round with a 3x Participation Cap, which means that Sequoia could have received up to 3x its investment while participating on an as-if converted basis with common stock, after its 1x liquidation preference.
This does not apply in the case of this particular acquisition, which at $19 billion is the largest buy of any venture-backed company in history, and is clearly more than a 3x return (hence Sequoia would want to covert its preferred stock to common). TGIF.
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