Sequoia cites a conflict of interest with payments company Stripe for its decision to call it quits at Finix.

What top-drawer VC investor Sequoia Capital paid for a clean conscience and a spotless reputation: $21 million + a board seat + shares + rights to information at portfolio company Finix. (TechCrunch)

Just last month Sequoia led Finix’s $35 Million Series B raising, gaining a board position for partner Pat Grady in the process. However, in a somewhat dramatic turn of events Sequoia has bailed from its Finix investment, on grounds of conflict of interest with its investment in payment processor Stripe. Sequoia’s action is especially significant given that it has never backed out of committed investment in its 48-year history.

Stripe gained $250 million in a September 2019 raising that valued it at $35 billion.

What happened, per Finix

Finix announced Sequoia’s decision on Monday, and quoted the following explanation from Grady: “While we’d previously concluded that Finix was not a direct competitor to any existing portfolio companies, after making the investment we came across a variety of small data points that collectively painted a different picture of the market. This decision had nothing to do with Finix, and everything to do with Sequoia’s desire to honor our commitments.”

Finix eased Sequoia of its dilemma and accepted its offer to return the equity, board seat, and information rights. In addition to keeping the funds provided by Sequoia, the fintech used a portion of the returned equity to raise an additional $10M.

That round was led by Inspired Capital, along with PSP Growth, and others.

New faces on Board

Finix also gained by valuable new inclusions on its Board. It added former U.S. Secretary of Commerce and founding partner at Inspired Capital, Penny Pritzker. Pritzker is the founder/chairman of PSP Partners and serves on the boards of Harvard and Microsoft. Alexa von Tobel, another founding partner at Inspired Capital, also joined the Finix Board.

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