Free money
Emailed on March 13th 2020 in The Friday Forward
Sequoia Capital has, for the first time in its history, parted ways with a newly funded company over a purported conflict of interest and, almost more shockingly, handed back its board seat, its information rights, its shares, and its full investment.
According to sources close to the situation, it just gave up $21 million.
This week Finix, a payments infrastructure company that was founded four years ago in San Francisco, told its roughly 70 employees that Sequoia — which led the company’s $35 million Series B round in early winter — is separating itself from the startup.
The reason, Finix told employees: Sequoia concluded soon after issuing its check that Finix competes too directly with Stripe, the payments company that represents one of Sequoia’s biggest private holdings currently and that in turn counts Sequoia as its one of its biggest outside investors.
As a result of Sequoia allowing Finix to keep its capital (thus materially strengthening Finix’s balance sheet), earlier backers in Finix — led by Inspired Capital of New York and including PSP Growth and others — have invested an additional $10 million in the company, which has now raised $65 million in capital altogether.
So if you're following along, Finix landed $21M in no-strings-attached, free money. Albeit, without a direct partnership with Sequoia (which is, in many cases, worth much more).
