FORTUNE — Every venture capital firm has an anti-portfolio, or companies that they regret having turned down for investment. Some firms even publicize their lists.
For Norwest Venture Partners, the latest anti-portfolio member has to be Workday (WDAY), the HR software company that last week went public and now is valued at more than $8 billion.
Norwest’s partners include George Still, who in 1991 led a $5 million investment into PeopleSoft for an 11% stake in the business. It would make Norwest the only venture investor in the history of PeopleSoft, which ultimately was acquired by Oracle (ORCL) for $10.3 billion.
PeopleSoft founder Dave Duffield would later co-found WorkDay with Aneel Bhusri, a former PeopleSoft executive who since had become a partner with VC firm Greylock. After Greylock financed Workday’s first several rounds of financing, Duffield reached out to Still in 2009 to see if Norwest would have interest in leading a $75 million Series E round at a pre-money valuation of just under $500 million.
At the time, Norwest was in the final stages of investing a $650 million fund raised three years earlier. It wasn’t really writing checks in the range of $46 million, particularly as available capital had become more scarce. So it passed,opening the door to new investor New Enterprise Associates.
From an asset allocation standpoint, it’s hard to fault Norwest. The firm had sold a certain strategy to limited partners, and chose to stick with its knitting.
But, in retrospect, Norwest has got to be kicking itself. NEA’s $46 million investment is now valued at around $722 million. Or, put another way, Norwest could have returned its entire $650 million fund with this single deal.
George Still did ultimately invest personal money in both the Series E and Series F rounds, as part of an agreement that also saw him join the board of directors.
“After the company decided to go with NEA , Workday asked if George would join the boar,” explains Norwest spokeswoman Katie Belding. “We thought about it, and our firm was fine with this decision, because the relationship would continue to add to our franchise and our portfolio company value-add via these relationships… We think the fact that Workday is as successful as it appears to be will continue to be valuable for us going forward.”
No doubt, but it’s hard to think that value will exceed what Norwest could have generated via a direct investment. At the time of this writing, George Still’s personal position is valued at nearly $40 million.
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