Twilio’s 300 percent surge this year has been windfall for Bessemer

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Twilio Inc. founder and CEO Jeff Lawson (C, in glasses) reacts after ringing the opening bell to celebrate Twilio’s initial public offering, at the New York Stock Exchange, June 23, 2016 in New York City.

In a year that’s featured the high-profile market debuts of Dropbox, Spotify and DocuSign, as well as numerous multibillion-dollar software acquisitions, one of the most lucrative deals was the decision by Bessemer Venture Partners to hang onto its Twilio shares.

Twilio, whose software powers the communications systems used by Airbnb, Salesforce and Nordstrom, went public in mid-2016. But 2018 will go down as the year that the company truly resonated with investors.

As of Thursday’s close, the stock is up over 300 percent for the year, more than three times the gain of the best-performing stock in the S&P 500. (Among this year’s venture-backed tech IPOs, the biggest gainer is security company Zscaler, which is up 162 percent from its debut price in March.)

Venture capital firms like Bessemer get paid to bet on tech start-ups, with the hope that their best picks go public or get acquired for many multiples of the amount they invested. Insiders are typically locked up from selling after an IPO for six months, but then start to unload their stake, dispersing the shares over time to limited partners or selling them and returning the cash.

Bessemer has sold about half its stake in Twilio. But hanging onto the other half for an unusually long period of time has paid off handsomely for the 107-year-old firm, whose other big wins include LinkedIn, VeriSign, Skype and Yelp.

The Twilio investment had an added twist this year. Bessemer was one of the biggest outside investors in SendGrid, which Twilio agreed to buy in October for $2 billion in stock. At the time the deal was announced, Bessemer still owned almost 90 percent of its SendGrid stake.

Taken together, Bessemer owns close to $1.2 billion worth of stock in Twilio and SendGrid even after selling hundreds of millions of dollars worth of shares to date, according to the latest public filings. That’s all from an investment of a little over $100 million that Bessemer put into the two companies, beginning with its seed investment in Twilio in 2009.