The Deal
Wednesday, November 25, 
11:00 pm

Sequoia and NEA win big with Sourcefire IPO

  Share     E-Mail    Discussion    Print Story

Already sitting on two of the best VC exits of 2007, Sequoia and NEA did it again last week when Sourcefire completed an IPO on Nasdaq. The two firms led Sourcefire's $11 million second round of funding in February 2003 and bought in at $1.54 per share, 50% less than the valuation paid by first round backers - Inflection Point Ventures, Sierra Ventures, Core Capital Partners and Big Basin Partners Timark LP -- one year earlier.

Still, as long as Sourcefire's shares remain at their current levels by the time the venture capitalists can sell all their shares, everyone wins from this liquidity event.

Even after selling 255,831 shares in the IPO, Sierra Ventures remains Sourcefire's largest shareholder with about $70 million worth of shares. Neither NEA nor Sequoia sold at the offering and retain 13% and 5.8%, respectively.

After Sourcefire's proposed sale to Check Point Software was nixed by regulators on national security grounds last year, the company went on to a $20 million Series D round led by Meritech Capital Partners. Meritech's investment is up more than 100% at Sourcefire's current share price of $17.08 per share.

While it occurred one year later, Sourcefire's current valuation of $410 million is almost double the $225 million price that was being offered by Check Point. Just goes to show that good, smartly managed startups find profitable exits no matter what the circumstances.

Tags: , , , , ,

Continue reading below

Also on Dealscape





Post a comment




The Deal Pipeline

Deal Video


Inside The Deal: AlixPartners' Steve Deedy on Black Friday, the holiday season and retail bankruptcies.


More video...

Crisis On Wall Street
Technology
Deals of The Decade

Community

Industry Insight

REIT IPO deja vu

Real estate sponsors that might wish to undertake an IPO will need to consider a wide variety of issues and begin to take action long before the first filing with the SEC.


Industry Insight

Loan-to-buy

Paulson's proposal to purchase an equity stake in Yellow Pages publisher Idearc is the second time in recent months an investor group has used its prepetition debt position to execute a bargain price 'exit LBO.'


Industry Insight

Managing your shareholder base

Growth companies and their PE sponsors should be wary of the pitfalls that arise when they layer on tiers of preferred stock.



©Copyright 2008, The Deal, LLC. All rights reserved. Please send all technical questions, comments or concerns to the Webmaster.