The end result was a largely severed connection. Today, Lightspeed is listed in Snap’s I.P.O. prospectus as the company’s second biggest venture investor, with 86.6 million shares, or a stake of more than 8 percent, and Mr. Liew has appeared on television shows, podcasts and in technology publications to discuss Snap. Yet he and Snap no longer have close ties, and Mr. Spiegel has not had meetings or spent time with Mr. Liew since the early investment rounds.
This account is based on interviews with four people involved in or briefed on Snap’s funding history, and who asked for anonymity because the details are confidential. Representatives for Snap and Lightspeed declined to comment, citing Security and Exchange Commission rules.
Mr. Liew and Mr. Spiegel met in March 2012, when Mr. Liew used Facebook to contact Mr. Spiegel, a Stanford University student who had recently started Snapchat with Mr. Murphy, a fraternity brother. At the meeting that followed, Mr. Spiegel said his father was tired of paying Snapchat’s bills. Mr. Liew offered to help.
Mr. Liew offered to invest $485,000 in Snapchat, which Mr. Spiegel and Mr. Murphy accepted. The investment was completed in less than two weeks.
What Mr. Spiegel and Mr. Murphy paid less attention to were the exact terms that Mr. Liew embedded in the deal. Those terms gave Lightspeed the right of first refusal to invest in a future round of funding and the ability to increase its…