FTX is worth $0, Sequoia Capital says after losing its entire $214 million investment in FTX

Venture capital giant Sequoia Capital said crypto exchange FTX is only worth $0 after losing its entire $214 million investment in FTX via two funds. In a note to limited partners which was shared on Twitter, Sequoia says it invested over $200 million in FTX via two funds.

The VC giant said that it invested $150 million into FTX.com and FTX.us via its Global Growth III fund and another $63.5 million into the exchange and its U.S. division via its SCGE Fund. The firm said the two investments represent just  3% of the Global Growth III fund and less than 1% of the SCGE fund.

“The $150 million loss is offset by the approximately $7.5 billion in realized and unrealized gains in the same fund, so the fund remains in good shape,” Sequoia wrote in a note.

Here is the note we sent to our LPs in GGFIII regarding FTX. pic.twitter.com/Cgp1Yxk1pz

— Sequoia Capital (@sequoia) November 10, 2022

Sequoia noted that in 2021 when the VC fund made the investments, FTX generated $1 billion in revenue and $250 million in operating income.

“We are in the business of taking risk. Some investments will surprise to the upside, and some will surprise to the downside,” Sequoia wrote. “We do not take this responsibility lightly and do extensive research and thorough due diligence on every investment we make.”

Sequoia is not the only VC firm with exposure to FTX. Other FTX’s backers include Softbank, Lightspeed Venture Partners, Temasek Holdings, the Ontario Teachers’ Pension Plan, and Race Capital, among others.

We also covered FTX back in September after the crypto exchange startup was in talks to raise up to $1 billion at a $32 billion valuation. The company said at the time it wanted to use some of the fresh capital infusion, on top of the $400 million round, to fuel more deal-making.

The announcement came just two weeks after its venture arm, FTX Ventures, acquired a 30% stake in New York-based global alternative investment firm SkyBridge Capital. FTX Ventures is a multi-stage venture capital firm founded in 2022 by FTX CEO Sam Bankman-Fried.