June 4, 2012 / 9:16 PM / 7 years ago

peHUB-Sequoia Capital profited in good times and bad

SAN FRANCISCO, June 4 (peHUB) - Sequoia Capital, long considered one the premier venture capital firms in Silicon Valley, generated positive investment returns even for funds raised at the peak of the dot-com bubble in 1999 and 2000, peHUB has learned.

The results not publicly reported before, will likely cement Sequoia’s reputation. The dot-com bust of 2000 eviscerated the value of many first-generation Internet companies and resulted in losses for most technology oriented venture funds raised in 1999 and 2000.

PeHUB, an interactive forum for the private equity community, obtained the performance data on the Sequoia funds from the University of California through a California Public Records Act request.

Sequoia raised three funds in 1999 and 2000. The best performer was the Sequoia Capital Franchise Fund, a $350 million late stage vehicle raised in 1999, which had generated an internal rate of return (IRR) of 11 percent as of December 2010, according to the University of California.

Sequoia Capital X, a $695.14 million early stage fund raised in 2000, boasted a 6 percent IRR, while Sequoia Capital IX, a $351.29 million early stage fund raised in 1999, had a 3 percent IRR.

The average 1999 venture fund has an IRR of -4.29 percent, and the average 2000 fund has an IRR of -2.51 percent, according to performance data from Thomson Reuters.

The Franchise Fund benefited from the success of Zappos and Green Dot, according to data from Thomson Reuters. Sequoia’s IX fund saw successful exits by PayPal, Red Envelope and diCarta, and the 2000 X fund profited from the Aruba Networks, Netezza, Isilon Systems and A123 Systems exits, Thomson Reuters reports.

UNIVERSITY DOUBLES DOWN

Separately, the University of California revealed it recently made investments in two more Sequoia funds - the 2011 late-stage Sequoia Capital U.S. Growth Fund V and Sequoia U.S. Venture 2010, a $451 million balanced stage fund. It did not disclose the size of the commitments.

The University of California, which is a limited partner in the Sequoia funds, now has positions in at least 12 of them spanning three decades.

The commitments to the three new Sequoia funds are the first the LP has been able to make with Sequoia since 2003. That was the year a California court ordered public institutions with venture investments to publicly disclose fund performance data.

The University of California has said it was not allowed to invest in Sequoia funds after that period. The LP has not explained why it is now allowed to invest in Sequoia funds.

The 2010 performance data show that the LP’s investments in prior Sequoia funds have improved since 2003, the last time it publicly released performance numbers.

The biggest gainer was Sequoia Capital VIII, a 1998 fund that has produced an IRR of 117 percent, up from the 90.4 percent IRR reported in 2003.

The University of California provided peHUB with the updated IRRs after Thomson Reuters sued to compel it to release performance data for all of its Sequoia and Kleiner Perkins Caufield & Byers funds.

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