RSS at Feed BurnerYouTube Payday and Sequoia
You have probably seen the figures today about the payday some people received as a result of Google’s acquisitions of YouTube. One of the investors was Sequoia Capital.
Sequoia has invested in a lot of hugely successful companies including Google, Yahoo, PayPal, eHarmony, Zappos, LinkedIn, and YouTube. Obviously they have made many, many other investments that did not work out as well. But the question needs to be asked - Are they just extremely good at picking companies or do they add value to the companies to help them be that successful?
Companies seeking investments should try to get some “smart money”, meaning investors that will be able to provide guidance and advice. That is something that can be expected from angel investors as well as VC money. It is very likely that Sequoia does add a great deal of value in companies which they invest. Even though the YouTube founders had some great experience before starting the company, without some “Smart Money” it is unlikely they would have achieved the level of success that would allow them to buy an NBA team.
On the other hand, Sequoia has another advantage, they are a big name and big player that has a proven track record. So it is much more likely they have a larger selection of companies coming to them. A company that gets money from Sequoia instantly gains more credibility than if they receive funds from a less well known VC. So they are more likely to have an interest in working with Sequoia. And since some VC’s have claimed it is getting harder to find good deals because there is so much money in the market investing in private companies, picking from a larger pool of potential companies makes it easier to pick a winner.
So it is likely a combination of expertise and having a great brand that has helped Sequoia achieve so much success.