Sequoia Capital to earn $100 million from Stripe’s $1.1 million acquisition of Bridge

Venture capital firm Sequoia Capital stands to make roughly $100 million following Stripe’s $1.1 billion purchase of Bridge.

The substantial performance is particularly notable in the crypto sector, where venture funding has declined significantly since its peak in 2022.

Other investors are also poised for big returns

Sequoia invested $19 million in Bridge during its Series A funding round that took place less than a year ago, Bloomberg reports. The amount translates to 16% ownership of the stablecoin platform, which, when liquidated, could mean a $100 million windfall.

Other companies that invested in Bridge may also see significant returns. Ribbit Capital, which owns about 10% of Bridge, expects a similar performance to Sequoia. Bedrock Fund Management and Index Ventures each own about 6%, and Haun Ventures maintains a 4% stake in the company.

Stripe announced its completed $1.1 billion bid for Bridge on October 20. The platform, co-founded by Sean Yu and Zach Abrams, provides software tools for businesses to process payments in stablecoins. However, the transaction is still pending regulatory approval and is expected to close in the coming months.

The billion-dollar deal comes just half a year after Stripe co-founder John Collison promised the company would support stablecoins by mid-2024. His company’s acquisition of Bridge is one of the largest in the crypto sector to date.

Crypto VC funding down 20% in Q3 2024

According to an Oct. 15 report from Galaxy Digital, funding for crypto companies fell 20% in the third quarter of 2024 to $2.4 billion. This drop was accompanied by a 17% decrease in operations, with only 478 reported in this period.

Analysts at Galaxy Digital attributed the drop to a “bull market” in crypto finance. In this scenario, investors have favored high-profile cryptocurrencies like Bitcoin and high-risk meme coins, often overlooking mid-sized projects seeking funding.

The report also noted that strong demand for Bitcoin cash ETFs from mainstream investors, such as pension funds and hedge funds, may have shifted focus away from early-stage crypto VC investments.

However, despite the drop in funding, Stripe’s interest in Bridge was fueled by the latter’s increased growth in recent months, reaching a $14 million run rate. Analysts typically use this metric to project a company’s future performance using its current financial data.

SPECIAL OFFER (Sponsored) Binance Free $600 (Exclusive to CryptoPotato): Use this link to register a new account and receive an exclusive welcome offer of $600 to Binance (full details).

2024 LIMITED OFFER on BYDFi Exchange – Up to $2888 Welcome Reward, Use this link to register and open a 100 USDT-M position for free!