One of the more interesting parts of the eBay-Skype mega-deal are the investors who hit the jackpot. Everyone knows about Draper Jurvetson Fisher's role given Tim Draper's willingness to talk about the company and his quasi-serious comment at the AlwaysOn conference
that Skype was seeking a $1-billion offer. But what about the other
investors who managed, for the most part, to stay behind the scenes. Om Malik had a nice post on Danny Rimer, a one-time analyst at Hambrect & Quist, who went on to form Index Ventures with his three brothers and three other partners. Silicon Beat talks about Howard Hartenbaum,
a partner with Draper Richards, who along with Bill Draper invested
$250K in Skype in 2002 for a 5% stake. (An interesting story on how Hartenbaum stumbled upon Skype can be found here.) The other VCs include Bessemer Venture Partners and Mangrove Capital Partners.
There's also speculation Rupert Murdoch also invested in Skype through
a private investment firm set up several years ago focused on the
digital economy. Some people suggest this is why News Corp. came out of
nowhere as a potential buyer for Skype - a move that spawned the idea
it was worth $3-billion.
What I'm perhaps most curious about is how much of Skype was handed
over to the VCs when the company raised $18.8-million in March 2004? We
now know Skype had revenue of $6-million last year, so when the
investment was made, the company likely had little or no sales. So
what's $18.8-million worth to a company looking to roll out premium
based services - a 10% stake, 20%, 30%? Private Equity Weekly reports that Dave Cowan, a general partner with Bessemer, suggested on blog that his firm will see a 150x ROI (I checked out his blog
but didn't see the ROI reference so it might have taken take it down).
If you take $18.8-million and multiple it by 150, you get $2.8-billion,
which would put the VC's stake at 69%. That strikes me as a big
stake but $18.8 million is a lot of money for a company with an
unestablished business model. If the VCs received 10% of Skype, they made a 23
times return on their investment ($410-million for $18.8-million); at 20%,
it's 46x; at 30%, it's 69x.
Update: Junto Boyz has more insight behind the investment scenes, while Private Equity Weekly has a take on Tim Draper's success, which also includes an investment in Baidu. By the way, I just got around to reading Robert Cringely's
take on why eBay made the deal. As usual, he does a nice job poking and
prodding the issue before concluding: "I still think is likely to be a
mistake in the long run".
|
||||||||||||||||||||||||||||||||||||||||||||||||||
|
Skype's Investors: It's Good to be a VC
by
Mark Evans
on Sat 17 Sep 2005 05:17 PM EDT | Permanent Link
Comments
Re: Skype's Investors: It's Good to be a VC
by
blogger_brent
on Mon 19 Sep 2005 03:11 PM EDT | Profile | Permanent Link
The reality is that VC deals can be complicated as to valuation (1-2x preferences on the original money is still common to manage downside risk, for instance). So the math you are doing is purely hypothetical. It is not unusual to see investors (VC and angel) own greater than 60% of a company post a few investment rounds... especially when close to $20M is raised. Google didn't fit that mold because they only raised a few million from VCs (I think Moritz said $2M) before becoming profitable. Valuation tends to rise dramatically after profitability. Bottom line... 100X is not un-reasonable here. A hell of a lot better than if they had held and tried for an IPO in 2 years... The valuation multiple would not have been anywhere near what eBay paid.
Re: Skype's Investors: It's Good to be a VC
by
Anonymous
on Fri 08 Sep 2006 01:21 AM EDT | Permanent Link
Fuckers. Why should I stay with a company that arbitrarily expires credits. I thought you guys were cool, but you turned out to be some corporate assholes with no clue about how to hold onto customers. I'm going to find a way to get this message to your vc so that you shrivel and die, shitheads.
Re: Re: Skype's Investors: It's Good to be a VC
Just believe ! it is not there mistake ! We all are humans !
Trackbacks
TrackBack URL: Weblogs that reference this article:
|
My blog has moved.
Check out the new Mark Evans. It's on Wordpress and part of my mini-blog empire that also includes All About Nortel You can subscribe to Mark Evans Tech by clicking on the RSS symbol above.
Check Out These Blogs
Search
Login
|
|||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||