Sequoia Set to Gain Over $100 Million From Crypto Acquisition

Venture capital firms are poised to earn hundreds of millions from Stripe Inc.’s acquisition of the cryptocurrency platform Bridge for $1.1 billion in cash and stock. This deal marks a significant win for venture capitalists in a challenging market for crypto startups.

Profitable Investments for Venture Capital Firms

Firms such as Sequoia Capital, Ribbit Capital, Bedrock Fund Management, Index Ventures, and Haun Ventures have seen their investments in Bridge pay off substantially. The rapid return on investment is notable, especially as the startup market struggles in the wake of the pandemic. Bridge, which is less than three years old, caught Stripe’s attention, leading to the acquisition.

Sequoia Capital Leads the Way

Sequoia Capital holds approximately 16% of Bridge, according to sources who requested anonymity. This stake is valued at over $100 million, a remarkable return on their $19 million investment from less than a year ago, when Sequoia led Bridge’s Series A funding. Sequoia partner Shaun Maguire spearheaded that deal and secured a board seat at Bridge. The firm declined to comment on the acquisition.

Other Major Investors

Ribbit Capital owns nearly 10% of Bridge, also valued at around $100 million. Other investors include Bedrock Fund Management, which has over a 6% stake, and Index Ventures, which holds approximately 6%. Haun Ventures, a crypto-focused firm, possesses about 4%. Representatives from Bedrock, Index, and Haun Ventures did not provide comments. Additionally, Ribbit and Bridge have not responded to requests for comment.

Bridge’s Business Model and Growth

Bridge operates a platform focused on stablecoins, a type of cryptocurrency designed to maintain a stable value, often pegged to the U.S. dollar. The startup’s rapid growth attracted Stripe’s interest, with its recent run rate reaching approximately $14 million and continuing to accelerate.

Positive Outlook Amid Industry Challenges

The acquisition brings optimism to the startup ecosystem, which has seen limited sales in recent years due to post-pandemic challenges and increasing regulatory scrutiny. The crypto sector, in particular, has faced ups and downs recently, with few opportunities for startups and investors to cash out through sales or public offerings.

Bridge’s swift growth and substantial acquisition signal a renewed sense of hope for investors, suggesting that their investments in crypto and other industries may yield significant returns in the future.