One of the biggest questions that Snap has faced from potential investors is why its two founders, Evan Spiegel
and Bobby Murphy, have retained such a hold on voting power in the company — power that public shareholders will not gain.
Lightspeed, a Silicon Valley venture capital firm, was the first institution to invest in Snap, the company
that popularized disappearing messages, and it is now set to reap more than $1 billion from what began as a mere $485,000 investment.
Snapchat Founders’ Grip Tightened After a Spat With an Early Investor -
When Snap goes public next month, one of the biggest winners will be Lightspeed Venture Partners.
A few months after Lightspeed completed its investment in Snapchat, another Silicon Valley
venture firm, General Catalyst, became interested in investing in the company.
But the big money for Lightspeed masks a complicated tale between the venture firm and Snap, the parent company of Snapchat.
At the heart of that is a Lightspeed venture capitalist, Jeremy Liew,
and the terms he embedded in his 2012 investment in what was then known as Snapchat.
It also made Snap an unattractive investment for other investors — who would not be able to take as large a stake as they would like in the company.
“When someone says something is standard, just ask why,
and why and why and why, until you really understand intricately, I think, how the deal is structured.”
Mr. Spiegel embarked on a way to work around Lightspeed and Mr. Liew so that he could get the investors he wanted in the future.