Commerce Ventures’ Post

Instacart is a Silicon Valley winner. But any firm that invested after the Series B didn't win. According to reporting from The Information, Kleiner and Valiant, who invested in the Series C of the company in 2015, paid $13.31 for their shares. At a midpoint IPO price of $27, they stand to roughly 2x their money over the course of 8 years. That's an annualized return of 9%, which maybe on first glance doesn't look that bad, but the S&P 500 had an annualized return of 12.3% during that time. They would have been better off parking that money with Vanguard in the VOO ETF. Anyone that invested in the D, E, F, G and subsequent rounds had even worse outcomes than those at the C. Investors at the Series I stand to lose 80% of their invested capital. Y Combinator, despite being the company's first backer, also didn't profit much from this investment. This shows the core drawback of the pre-seed "spray-and-pray" model -- their original $75,000 investment only netted $8.5M in returns. That's an impressive annualized return, but unfortunately small in absolute dollars. By comparison, their most recent summer cohort of 229 companies cost the accelerator a whopping $115M in investment dollars. Oh and their follow-on investment of $30M in 2017 only generated an annualized 7% return, again losing to the S&P 500. The single biggest winner is decidedly Sequoia Capital, which invested ~$6M at the Series A. That single investment is now worth $675M. It pays to be an early investor with conviction. #Instacart #YC #Sequoia #KleinerPerkins #A16Z #IPO #VC #Startups

Instacart is a Silicon Valley winner. But any firm that invested after the Series B didn't win. According to reporting from The Information, Kleiner and Valiant, who invested in the Series C of the company in 2015, paid $13.31 for their shares. At a midpoint IPO price of $27, they stand to roughly 2x their money over the course of 8 years. That's an annualized return of 9%, which maybe on first glance doesn't look that bad, but the S&P 500 had an annualized return of 12.3% during that time. They would have been better off parking that money with Vanguard in the VOO ETF. Anyone that invested in the D, E, F, G and subsequent rounds had even worse outcomes than those at the C. Investors at the Series I stand to lose 80% of their invested capital. Y Combinator, despite being the company's first backer, also didn't profit much from this investment. This shows the core drawback of the pre-seed "spray-and-pray" model -- their original $75,000 investment only netted $8.5M in returns. That's an impressive annualized return, but unfortunately small in absolute dollars. By comparison, their most recent summer cohort of 229 companies cost the accelerator a whopping $115M in investment dollars. Oh and their follow-on investment of $30M in 2017 only generated an annualized 7% return, again losing to the S&P 500. The single biggest winner is decidedly Sequoia Capital, which invested ~$6M at the Series A. That single investment is now worth $675M. It pays to be an early investor with conviction. #Instacart #YC #Sequoia #KleinerPerkins #A16Z #IPO #VC #Startups

Instacart is a Silicon Valley winner. But any firm that invested after the Series B didn't win. According to reporting from The Information, Kleiner and Valiant, who invested in the Series C of the company in 2015, paid $13.31 for their shares. At a midpoint IPO price of $27, they stand to roughly 2x their money over the course of 8 years. That's an annualized return of 9%, which maybe on first glance doesn't look that bad, but the S&P 500 had an annualized return of 12.3% during that time. They would have been better off parking that money with Vanguard in the VOO ETF. Anyone that invested in the D, E, F, G and subsequent rounds had even worse outcomes than those at the C. Investors at the Series I stand to lose 80% of their invested capital. Y Combinator, despite being the company's first backer, also didn't profit much from this investment. This shows the core drawback of the pre-seed "spray-and-pray" model -- their original $75,000 investment only netted $8.5M in returns. That's an impressive annualized return, but unfortunately small in absolute dollars. By comparison, their most recent summer cohort of 229 companies cost the accelerator a whopping $115M in investment dollars. Oh and their follow-on investment of $30M in 2017 only generated an annualized 7% return, again losing to the S&P 500. The single biggest winner is decidedly Sequoia Capital, which invested ~$6M at the Series A. That single investment is now worth $675M. It pays to be an early investor with conviction. #Instacart #YC #Sequoia #KleinerPerkins #A16Z #IPO #VC #Startups

Instacart is a Silicon Valley winner. But any firm that invested after the Series B didn't win. According to reporting from The Information, Kleiner and Valiant, who invested in the Series C of the company in 2015, paid $13.31 for their shares. At a midpoint IPO price of $27, they stand to roughly 2x their money over the course of 8 years. That's an annualized return of 9%, which maybe on first glance doesn't look that bad, but the S&P 500 had an annualized return of 12.3% during that time. They would have been better off parking that money with Vanguard in the VOO ETF. Anyone that invested in the D, E, F, G and subsequent rounds had even worse outcomes than those at the C. Investors at the Series I stand to lose 80% of their invested capital. Y Combinator, despite being the company's first backer, also didn't profit much from this investment. This shows the core drawback of the pre-seed "spray-and-pray" model -- their original $75,000 investment only netted $8.5M in returns. That's an impressive annualized return, but unfortunately small in absolute dollars. By comparison, their most recent summer cohort of 229 companies cost the accelerator a whopping $115M in investment dollars. Oh and their follow-on investment of $30M in 2017 only generated an annualized 7% return, again losing to the S&P 500. The single biggest winner is decidedly Sequoia Capital, which invested ~$6M at the Series A. That single investment is now worth $675M. It pays to be an early investor with conviction. #Instacart #YC #Sequoia #KleinerPerkins #A16Z #IPO #VC #Startups