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Here’s How Snap Has Made Investors Rich


Apr. 7 2017, Updated 9:05 a.m. ET

Laughing all the way to the bank

Snap’s (SNAP) IPO (initial public offering) may still be weighed down in controversy over the sale of shares without voting rights. But early investors are laughing all the way to the bank. They’re now a symbol of how being at the right place at the right time can produce incredible results.

Snap went public at a valuation of ~$24.0 billion after it priced its stock at $17. For those who got into the stock early and acquired shares at a much lower price, the IPO has caused their bank accounts to swell significantly.

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Venture capital firm Lightspeed Venture Partners was an early believer in Snapchat. It put $485,000 into the startup in 2012 and continued to make more investments. When Snap went public, Lightspeed owned ~86.0 million Snap shares and an 8.6% stake in the company, according to a Reuters report. IPO pricing of $17 meant Lightspeed’s stake in Snap was valued at ~$1.5 billion. With the company’s valuation now more than $25.0 billion, Lightspeed’s claim in the company is more than $2.5 billion.

Another early believer in Snap was venture firm Benchmark, which owned 13.0% of the company at the time of the IPO. The stake was valued at ~$3.2 billion based on the IPO price. It was worth even more after the stock popped following the IPO. General Catalyst and Institutional Venture Partners, which also made early investments in Snap, have seen their investments rise significantly.

What does the future hold?

What the future holds for Snap is unknown. But by describing itself as a camera company while operating as a social media company, it finds itself with competitors such as GoPro (GPRO), Canon (CAJ), Facebook (FB), and Alphabet (GOOGL).


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