Sequoia’s Zappos-era Portfolio Still Seeking Exits

Zappos is the first big win for Sequoia Capital’s eleventh fund, and it won’t likely be the last.

The firm’s $425 million, 2003 vintage fund caught startups in a weird time — after the dotcom bust but before Web 2.0 kicked into high gear. It invested in dotcom survivors like Zappos and eHarmony, as well as companies that presaged Web 2.0, like LinkedIn and Kayak.com.

The firm used the dotcom downturn to its advantage, picking up enviable stakes in attractive companies.

Though six years into the fund’s life, however, Sequoia has yet to reap many of the rewards of its investing. So far, Sequoia has sold eight of the 36 companies in its 11th fund, according to data from Thomson Reuters (plus some supplemental work by peHUB).

It’s difficult to judge exactly how well the firm has done on its exits because so many of the deals were for undisclosed amounts.

You can get the spreadsheet with all 36 companies and their status here, or check out the highlights below:

• Sequoia’s Jim Goetz sold GPS maker Dash Navigation, which had raised $70.66 million from VCs, to Research in Motion for $8.3 million in June 2009, according to reports.
• Roelof Botha sold local business search engine Insider Pages, which had raised $8.52 million, to IAC’s CitySearch for $13 million in 2007, according to reports.
• Pierre Lamond sold fables-semiconductor maker Integration Associates, which had raised $11 million, to Silicon Laboratories for $80 million in 2008, records show.
• Sameer Gandhi sold automation software maker Logical Apps, which had raised $18 million, to Oracle for an undisclosed amount in 2007, records show.
• Mark Stevens sold semiconductor maker Miradia, which had raised $66.09 million, to Touch Micro-System-Technology Corp. for an undisclosed sum in 2009, records show.
• Goetz sold software maker PeakStream, which had raised $22 million, to Google for an undisclosed sum in 2007, records show.
• Mark Kvamme sold social media marketing company PopularMedia, which had raised $18.25 million, to StrongMail Systems for an undisclosed sum earlier this year, records show. What the net-effect is to Sequoia’s fund is unclear since StrongMail is also a Sequoia-backed company.
• Michael Moritz sold shoe seller Zappos, which had raised $49.11 million, to Amazon for $920 million.

Other companies in Sequoia’s portfolio are either looking to sell or ready to go public, according to reports.

• Mark Kvamme’s LinkedIn, which has raised $103.45 million, could “go public at any time” and has been profitable for two years, the company’s founder said earlier this year.
• Kvamme’s SearchMe, which has raised $31 million, is desperate for financing or an acquisition. So much so, that it has shut down its site, according to reports. CEO Randy Adams told TechCrunch he’d need another $50 million to keep the company going: “In this economy nobody wants to invest that kind of money in a company that is pre-revenue, even if the net result is potentially a multi-billion dollar company,” TechCrunch reports him as writing. He’s planning to cut the company’s employees to 10 from 45

Then there are several other investments that have grown very large:

• Sameer Gandhi’s eHarmony, which has raised $113 million, is no longer listed on Sequoia’s website since Gandhi moved over to Accel Partners in 2008. Still, the company is funded out of Sequoia XI and may be well-positioned for a public offering at some point. Dating is one of the few things people seem willing to pay for online and eHarmony measures its revenue in the hundreds of millions, sources say. Millennium Technology Ventures picked up shares in the company during a secondary sale of employee shares earlier this year (as did Zappos), records show. The company seems in no hurry to liquidate or go public.
• Michael Moritz’s Kayak, which has raised $223 million, acquired competitor SideStep for $196 million in 2007, according to reports. The combination was designed to make one company that could eventually go public, according to SideStep investor Woody Marshall told VentureBeat in 2007.
• Moritz’s HealthCentral Network has raised $88.82 million from Sequoia, Carlyle, Allen & Co., IAC and others. It bought healthcare information website Wellsphere for an undisclosed amount in January. It bought HIV/AIDS information sources TheBody and TheBodyPro for an undisclosed amount in September 2008.
• ITA Software was huge before Sequoia’s Michael Moritz participated in a $100 million financing in 2006.

Then there are the Sequoia companies that have taken on debt since Sequoia’s “RIP: Good Times” meeting. Taking on debt instead of venture financing can help a startup from further diluting its equity. Or it can be a sign of financial trouble. Records of credit lines are difficult to come by and this list may not be complete:

• Greg McAdoo’s PowerFile received an undisclosed bridge loan from Silver Creek Ventures in June, records show.
• Mark Kvamme’s Searchme raised a $3.5 million debt round in May, records show.
• Kvamme’s StrongMail Systems raised a $2 million debt round in March, records show.
• Mark Stevens’ Xceive Corp. has raised $10.6 million in debt since September 2008, records show.