A legendary venture capitalist sealed one of Silicon Valley’s most iconic deals when he invested in Apple back in 1977, the year after it was founded.
Sequoia Capital celebrated Apple’s 50th anniversary on Wednesday by releasing the late Don Valentine’s memo about Apple for the first time — and it shows just how far the computer maker has come.
“In honor of 50 years of Apple, we’re sharing — for the first time ever — Don Valentine’s original 1977 memo for Sequoia’s investment into Apple Computer. #Apple50,” the VC firm wrote on X.
In his memo about “Apple Computer,” Valentine wrote that he met directly with its founder, Steve Jobs. He described its business as: “Home — Hobby Computers.”
That sounds quaint from today’s standpoint, given Apple has become one of the world’s biggest manufacturers of consumer electronics, such as iPhones, Macs, iPads, and AirPods.
The Sequoia founder proposed a $600,000 financing round for Apple, and estimated its market to be worth over $500 million.
He jotted down that Apple earned $750,000 in net sales and around $60,000 in pre-tax earnings in the year to September 1977. He projected those figures would rise to $14 million and $700,000, respectively, for the next 12-month period.
Those numbers look tiny compared to now. Apple generated $416 billion of net sales and $112 billion of net income in its last financial year. It sold nearly $210 billion worth of iPhones alone, and racked up another $109 billion from services such as the App Store, Apple Music, Apple Pay, and iCloud.
“Leading company in a hot biz … $600k buys 10% — very rich deal, management questionable for this evaluation,” Valentine wrote in his comments on the deal.
First bite of the Apple
Valuing Apple at $6 million, or 8 times its net sales for the previous year, clearly struck Valentine as a high price to pay. He was also skeptical whether the notoriously prickly Jobs and his colleagues should command that kind of premium.
However, looking back 50 years later, it’s evident that Valentine made one of the most prescient investments in business history, and it was an absolute steal.
After all, Apple went public three years later, in December 1980, at a valuation roughly 300 times higher — $1.8 billion. Today, it commands a market capitalization of $3.8 trillion, making it the world’s second-most-valuable company after Nvidia.
Adjusting for stock splits and assuming dividends were reinvested, $1,000 invested in Apple’s IPO would be worth close to $2.6 million today. Earlier backers of the company stood to make multiples more.
However, Sequoia exited its Apple stake in 1979, notching a very healthy return but missing out on a phenomenal one. Another famous investor stepped in decades later and captured his own massive return on Apple.
Warren Buffett estimated during a rare TV interview this week that Berkshire Hathaway’s investment in Apple yielded over $100 billion of pretax profit for his conglomerate.
Buffett built the position between 2016 and 2018, and it remains Berkshire’s most-valuable stock holding, even though Buffett has sold more than two-thirds of it since 2023.
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