Snapchat maker Snap Inc. held the biggest initial public offering ever for a Los Angeles company this week pricing its shares at $17 apiece. The company made its debut on the New York Stock Exchange on Thursday, where it quickly leaped to close at $24.48.
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Of the nearly $3 billion that Snap Inc. has raised from investors for technology and hiring ahead of next month’s expected IPO, almost none of it has come from Los Angeles financiers.
The county’s leading venture capital firms — the investors that technology entrepreneurs often turn to for money and advice — knew the photo-messaging app had become a hit among teenagers. But for a variety of reasons, they passed on financially supporting the company.
Between Snapchat’s founding at Stanford University in spring 2011 and its rise to the global stage in 2013, Los Angeles firms had a short window to get a sizable piece of the company.
At Upfront Ventures, the largest start-up investor based in Los Angeles, associate James Bailey urged managing partner Mark Suster to take a meeting with Snapchat. But Suster dismissed the app as a tool for sexting and marital infidelity.
CrossCut Ventures and Clearstone Venture Partners didn’t have enough free cash to make a bet on Snapchat. For many firms, including Baroda Ventures, CT Ventures and Rustic Canyon Partners, a chat app with no business plan didn’t fit the profile of a company they’d back.
“We did not see the real revenue potential back then,” CT’s Alex Suh said.