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It seems like the kind of pickle that might only happen in Startupland.
One of the biggest names in venture capital pours $21m into a buzzy payments startup. Then it realizes 1 of the other major companies in its portfolio… is also a buzzy payments startup. Danger, Will Robinson!
What do you do? If you’re Sequoia Capital, you say: Finix, keep the (giant chunk of) change.
It’s a curious case of a confounding conflict of interest…
… and TechCrunch got the scoop. A brief recap:
- Finix, a payments-infrastructure company, raised $35m in a Series B round this winter. Sequoia Capital led the way with $21m.
- On Monday, Finix said Sequoia informed them of a “conflict of interest” because of Sequoia’s investment in Stripe, a competing payments startup.
- Sequoia’s solution: It told Finix to keep the $21m. Finix flipped it into $10m in new investment money, and added Penny Pritzker, a former US Secretary of Commerce and Inspired Capital partner, to its board.
TechCrunch said Sequoia had never backed out of an announced deal in its nearly 5-decade history.
Soooo… Why the heck did this deal fall apart?
- Maybe Sequoia didn’t want to inflame that competition — or get a rep for double-dealing.
- Maybe Stripe’s deal with Sequoia had a “no competing investments” clause.
Also: How much does $21m even matter? The windfall was a big deal to Finix, obviously, but to major investors, does it just feel like a Venmo payment?