It’s not exactly a surprising thing in venture circles to hear that Sequoia Capital is doing well. The firm goes to great lengths to keep its exact returns out of the public eye, but its track record – including early stakes in Apple, Google, and Cisco Systems – obviously produces some enviable numbers.
This past year has been no exception. In the past twelve months, Sequoia has racked up at least eighteen exits, according to data from the firm and Thomson Reuters (publisher of peHUB). Of those, at least six portfolio companies are fetching values of $1 billion or higher.
Some of the more impressive recent exits include the IPOs of firewall developer Palo Alto Networks and enterprise software provider ServiceNow, each valued well above $3 billion. There’s also the stunningly fast sale of Instagram, snapped up by Facebook for $1 billion days after Sequoia invested at half that valuation. Though Sequoia hasn’t specified profits from recent investments, partner Doug Leone confirms that GPs have “been very encouraged by the performance of our partner companies.”
But while Sequoia may be well known for its good exits, there’s another skill for which it gets less credit. Particularly in the consumer Internet, the firm has demonstrated an uncanny knack for avoiding bad exits.
Take social media. Over the past year, Sequoia managed to avoid involvement in any of the IPO market’s most notorious disappointments. It did not invest in Facebook, Zynga or Groupon, though it was a large investor in LinkedIn, the top performer of the large social media offerings
According to Leone, Sequoia’s non-participation in large deals in which private market valuations exceeded public ones was by no means an accident.
“We’ve deliberately avoided chasing companies at the late stages or buying secondary shares,” he wrote in an email. Rather, he says, the firm’s focus has been on “enduring companies (that) have the sustainable competitive advantages, strong growth, profitability and other characteristics that are prized in the current environment.”
VCJ subscribers can read a full list and analysis of Sequoia’s recent exits here.
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