Parent cut Saint Francis high school in on venture capital deal five years ago after noticing his children using messaging app
The parents of pupils at a Silicon Valley school were sent an unusual letter this week telling them the school had made at least $24m (19.6m) in profit from a $15,000 punt on messaging app Snapchat.
I am happy to share some momentous news with you, Simon Chiu, head of Saint Francis high school, said in the letter. The schools investment in Snap has matured and given us a significant boost.
Chiu explained that five years ago Saint Francis parent Barry Eggers, a venture capital investor, had convinced the private school in Mountain View to invest in Snapchat after watching his children become obsessed with the messaging service based on disappearing photos.
The letter continues: After learning the extent of Snapchats popularity and conducting some due diligence with this firm, part of which included one of his partners tracking down the founder who was operating the business out of a Stanford [University] dorm room at the time, Barry knew he wanted to invest in the promising company, and in a stroke of remarkable generosity he decided to invite Saint Francis to join him.
Eggers said he came home from work one day to find his kitchen had been invaded by his daughter Natalie and her friends and they were all glued to their phones. I felt compelled to ask, What are you all doing? My daughter looked up at me and said: Dad, have you seen this app? Its called Snapchat.
His daughter was receiving 30 of the disappearing picture messages a day, and all of her girlfriends agreed this was the hottest app at school along with Angry Birds. Eggers worried it might just be a girl thing, so asked his son Andrew who confirmed that boys were Snapchat fans too.
Eggers was thus sold on Snapchat. He tracked down one of its co-founders Evan Spiegel, and Eggers Lightspeed Venture Partners became the first investor in the app. His firm put up $500,000 in funding, but split the deal to allow the Saint Francis school to put in $15,000.
The schools investment delivered about 2.1m Snapchat shares. It sold about two-thirds of them for $17 each as part of the companys public float in New York on Thursday. The share sale netted the schools endowment fund $24m, and the rising price of Snapchats shares mean its remaining shares are still worth a further $18.5m.
Chiu said the proceeds from the share sale would be used to fund our work towards realising the bold vision and goals of the Catholic schools strategic plan, which includes expanding financial aid for poorer students. The schools fees are $17,370-a-year.
It is not the first time Saint Francis has turned a profit from investing in a company. In 1996 it made a $2.1m return on a $25,000 investment in Advanced Fibre Communications, a telecom services company which is now part of Tellabs.
Snaps shares soared 44% on their debut on Thursday, and were up a further 8% to $26.52 on Friday.
The flotation valued the stakes held by Spiegel and fellow founder, Bobby Murphy, at more than $4bn each. Eggers Lightspeed, which increased its stake as Snapchat grew, had a stake worth more than $1.6bn.