Sequoia Capital, the only venture investor in WhatsApp Inc., stands to make about $3.5 billion on its investment in the mobile messaging service that Facebook (FB) Inc. agreed to buy for as much as $19 billion in the biggest Internet deal in more than a decade.
Sequoia, which backed some of Silicon Valley’s top companies since it was founded in 1972, paid about $8 million for a stake of more than 15 percent in 2011, according to a person with knowledge of the deal. The holding is valued at about $3.5 billion after Facebook offered as much as $19 billion for the company, said the people, who asked not to be identified because details of the investment are private.
The purchase would be the biggest Internet deal since the $124 billion AOL Inc.-Time Warner merger in 2001 and allow Sequoia to reel in more cash following a year in which it returned about $3 billion to investors. The firm, based in Menlo Park, California, was an early investor in Apple Inc., Yahoo! Inc. and Google Inc., the biggest venture-backed initial public offering until Facebook’s 2012 IPO.
Sequoia said in a blog post today that WhatsApp co-founders Jan Koum and Brian Acton have created the “communications backbone” of the Internet.
“As competitors promoted games and rushed to build platforms, Jan and Brian remained devoted to a clean, lightning fast communications service that works flawlessly,” Jim Goetz, who led the investment for Sequoia, wrote in the post.
Andrew Kovacs, a spokesman for Sequoia, declined to comment on the firm’s stake. A representative for WhatsApp didn’t immediately respond to a request for comment.
Facebook’s purchase of WhatsApp includes $12 billion in stock, $4 billion in cash and $3 billion in restricted shares. WhatsApp has more than 450 million members, with 1 million being added daily, who use the service to send messages over the Web.