Silicon Valley school makes $24 million from Snap IPO
SAN FRANCISCO - It’s an only-in-Silicon-Valley kind of story: A well-to-do private Catholic high school makes a $15,000 investment five years ago in the company developing the Snapchat app, holds on to it for years and ends up with a windfall of $24 million.
One well-connected parent, Barry Eggers, made it happen for St. Francis High School by persuading the school’s board to take a risk on Snap Inc., which had a blockbuster initial public stock offering Thursday.
Snap launched the Shapchat app that teens and young adults love to use to send photos and videos that disappear a few seconds after recipients see them.
Eggers is a partner at Lightspeed Venture partners, the venture capital firm that invested in Snapchat when its founder was still a student at Stanford University. He had a child attending St. Francis in 2012, when the board of the high school in Mountain View agreed to invest the seed money in Snap.
Few, if any, other schools have that sort of advantage, said Stephen Andriole, a professor of business, accountancy and information systems at the Villanova School of Business in Pennsylvania.
“The only way to do this is through a personal relationship,” he said. “The probability of success is quite low.”
Snap’s shares sold for $17 each in its initial public offering, and St. Francis sold 1.4 million shares at that price, generating a gain of about $24 million.
The stock soared to about $27 as of Friday, making the remaining 600,000 shares the school owns worth about $16 million.
“I think everyone understands it’s a pretty transformational event for our school,” school President Simon Chiu said in an interview.
Chiu acknowledged the good fortune of being in the right place at the right time.
“Our kids are understanding that it’s pretty exciting to live out in Silicon Valley,” he said. “It’s hard to imagine it happening anywhere else. If you work hard and do the right things, sometimes luck will find you.”
Andriole and other experts did not know whether investing in startup companies when they are in their early stages is a growing trend at private high schools. Universities have established venture capital funds, so it’s possible that there has been a “trickle-down effect,” he said.