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Was Veeva a better VC deal than Twitter?

October 17, 2013: 4:42 PM ET

Emergence Capital stands to generate 266x on its investment in Veeva.

131016091822-veeva-systems-620xaFORTUNE -- Yesterday I wrote about how Twitter's earliest investors would more than double their entire funds on that one deal, assuming that the company goes public at a valuation similar to where it's been trading on the private markets. But a company with much less sex appeal may actually have been the better venture capital investment.

That would be Veeva Systems (VEEV), a provider of cloud-based CRM and content management solutions for the life sciences industry. It went public yesterday at $20 per share, and has since doubled to close trading today at $41.60 per share.

Veeva's only venture capital investors was Emergence Capital Partners, which invested a total of $6.5 million for more than a 31% ownership stake (including a $4 million Series B round in 2008 and a subsequent secondary purchase).

Emergence brought back around $10 million by selling 500,000 shares in the IPO, but held onto another 34.5 million shares that today are valued at around $1.44 billion. Once you do the basic math, that works out to around a 266x return on investment. It also would return Emergence's second fund more than 7x over -- pretty impressive, particularly given that the fund also included an early investment in Yammer, which was acquired by Microsoft (MSFT) for $1.2 billion.

RELATED: Veeva CEO: We were never going to delay IPO

More importantly, that may be a better return than what Twitter's early backers will generate.

Using the $31 per share baseline, for example, Union Square Ventures' current stake would be worth $863 million. But it also sold shares in a pair of secondary transactions (alongside Spark Capital), which likely generated a few hundred more million dollars (Twitter, for some reason, doesn't disclose these sales in its IPO documents). So let's be real generous and put the total value at $1.2 billion. Or, put another way, less than Emergence's stake in Veeva. Moreover, USV -- not to mention Spark Capital and Benchmark -- invested more than $6.5 million in Twitter.

To be clear, both deals are going to be massive winners for their investors -- and arguing one is better than the other is a lot like favoring a 160-meter mega yacht over a 155-meter mega yacht. Moreover, all of this is paper value until the VCs actually distribute shares (and that is amplified in Twitter's case, since we don't even have a public price yet).

But it felt worth noting that the deal that's getting all of the attention may not actually be the best one out there.

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Dan Primack
Dan Primack
Senior Editor, Fortune

Dan Primack joined Fortune.com in September 2010 to cover deals and dealmakers, from Wall Street to Sand Hill Road. Previously, Dan was an editor-at-large with Thomson Reuters, where he launched both peHUB.com and the peHUB Wire email service. In a past journalistic life, Dan ran a community paper in Roxbury, Massachusetts. He currently lives just outside of Boston.

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