Sequoia Capital Keeps The Chinese IPO Hits Coming

Even when U.S. companies are struggling to go public, venerable venture firm Sequoia Capital still finds a way to mint money from IPOs.

Sequoia has another winner in China on its hands with Beijing-based Qihoo 360 Technology Co., whose stock soared 134% in its debut on the New York Stock Exchange. At a closing price of $34, Sequoia's 8.5% stake is worth about $337 million.

According to Qihoo's regulatory filing, Menlo Park, Calif.-based Sequoia invested $6 million in Series A funding in January 2006 at 50 cents a share, and another $1 million in Series B funding in November 2006 at 66 cents a share.

So Sequoia's $7 million investment has now multiplied by 48 times in five years.

While Qihoo's IPO will also shower money on Highland Capital and Redpoint Ventures once they're able to sell or distribute shares to limited partners the two firms own 15.9% and 4.3%, respectively it's Sequoia Capital that has recently knocked it out of the park with Chinese IPOs.

Last year Sequoia had 13 IPOs worldwide, the most of any venture firm by far, according to Dow Jones VentureSource, and nine of those were Chinese companies. Only three were in the U.S., while one more was in India. The firms with the next most IPOs last year were China-focused investors Shenzhen Cowin Capital, with eight, and IDG Capital Partners, with six. The U.S. firm with the second most IPOs last year was Sequoia's cross-street rival, Kleiner Perkins Caufield & Byers, with five.

Sequoia's notable performance in China is a testament to its aggressive push in 2006 to set up shop in China with a $200 million fund. One of its first investments from that fund was Qihoo. It's since raised a $430 million China growth fund in 2007, and a $1 billion third fund in 2010, according to VentureWire.

While Sequoia made its mark with almost clairvoyant early bets on game-changing U.S. technology companies like Apple Inc., Cisco Systems Inc., Google Inc., Oracle Corp. and Yahoo Inc., the firm has now seen at least 13 of its Chinese portfolio companies go public in the past few years.

Sequoia is no doubt benefiting from escalating public-investor demand in Chinese companies: Last year, a record 38 IPOs from China-based businesses listed in the U.S., raising $4 billion, according to data from Dealogic. While only a handful have occurred so far this year, there's a large backlog of companies expected to hold offerings in the second quarter after year-end audits are finalized.

All of this is especially welcome to Sequoia and its limited partners at a time when the U.S. stock markets have shown little signs of life since 2007. There were 46 IPOs of U.S. venture-backed companies last year, far above the eight offerings in 2010 and seven in 2009, but still well below what venture capitalists would consider healthy levels. Eleven U.S. venture-backed companies have gone public in the first quarter, about the same quarterly pace as last year.

Sequoia has one other Chinese company in IPO registration right now with mobile Internet services company NetOin Mobile Inc., as well as two in the U.S.: online travel company Kayak Software Corp. and career networker LinkedIn Corp.

Below is a list of Sequoia-backed IPOs since January 2010. These companies' performance is a mixed bag, although it's a bit early to make too much sense out of these stocks.

Sequoia-Backed IPOs since January 2010:

AutoNavi, Beijing mapping database software

IPO: July

Stock price since IPO: $17.37 +39%

Alpha and Omega Semiconductor, Sunnyvale, Calif. power management semiconductors

IPO: April

Stock price since IPO: $12.83 -29%

Bona Film Group, Beijing movie production and distribution services

IPO: December

Stock price since IPO: $6.72 -21%

Country Style Cooking, Chongking, China fast food restaurant services

IPO: September

Stock price since IPO: $16.46 -0.002%

First Republic Bank, San Francisco private banking services

IPO: December

Stock price since IPO: $30.53 +20%

Green Dot, Monrovia, Calif. prepaid credit card services

IPO: July

Stock price since IPO: $42.07 +17%

Le Gaga Holdings, Hong Kong produce distribution services

IPO: October

Stock price since IPO: $9 -5%

Mecox Lane, Shanghai mail order services

IPO: October

Stock price since IPO: $6.10 -45%

Noah Holdings, Shanghai personal wealth management services

IPO: November

Stock price since IPO: $15.37 +10%

Qihoo 360 Technology, Beijing Internet and mobile security products

IPO: March 30, 2011

Stock price since IPO: $34 +134%

SKS Microfinance, Hyderabad, India micro-finance services

IPO: August

Stock price since IPO: INR 532.25 -46%

Sky-Mobi, Zhejiang, China mobile phone middleware software

IPO: December

Stock price since IPO: $12.81 +60%

SinoTech Energy, Beijing petroleum engineering and technology services

IPO: November

Stock price since IPO: $7.78 -8%