In WhatsApp Deal, Sequoia Capital May Make 50 Times Its Money

The hottest tech start-ups typically have a roster of outside investors hoping for a big return. In the case of WhatsApp, the messaging service that Facebook bought on Wednesday for $16 billion, there is only one: Sequoia Capital.

Sequoia, a venture capital firm founded in 1972, is poised to make as much as 50 times its money on the deal, according to an estimate by DealBook and a person briefed on the matter. That return, stunning even by the standards of Silicon Valley, is the latest entry in Sequoia’s winning record.

The firm invested a total of about $60 million in WhatsApp, increasing its stake after an initial $8 million investment in 2011, the person briefed on the matter said. This gave Sequoia a percentage of the company in the “high teens.”

At the high end of that range, Sequoia’s stake would be worth about $3 billion.

Three-quarters of the $16 billion deal is in Facebook shares. Using that ratio, Sequoia would come away with roughly $2.3 billion in Facebook stock, making it one of the biggest shareholders of the social network.

While Sequoia is not as flashy as some of Silicon Valley’s newer tech investors, it has built a remarkable track record over the years, as an early investor in technology giants like Apple, Google, Yahoo and Oracle.

The firm has continued that streak in recent years, leading a $50 million investment round in Instagram just days before Facebook bought the photo-sharing company for $1 billion in 2012.

Sequoia was also the only venture capital firm backing YouTube, emerging as a big winner when Google bought the company for $1.65 billion in 2006.

In the wake of the dot-com crash, Sequoia achieved a windfall when eBay bought one of its portfolio companies, PayPal, for $1.5 billion in 2002.

“WhatsApp reminds us of other companies that we partnered with â€" like PayPal, and YouTube â€" whose founders chose a similar path,” Jim Goetz, a partner at Sequoia, wrote in a blog post on Wednesday.

“As with Instagram, which we were fortunate to back with others, for us today’s announcement is bittersweet,” Mr. Goetz wrote. “Our excitement about the opportunities that lie ahead for WhatsApp and Facebook is tinged with a little sadness, and a lot of nostalgia, for the pleasure and satisfaction that all of us at Sequoia have felt working with the company over the past three years.”