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Congratulations, great news for guys that worked hard on it. May I ask what is the reasoning/breakdown of $20 million valuation? For example id Software was sol
by Keyframe 16y ago
Congratulations, great news for guys that worked hard on it. May I ask what is the reasoning/breakdown of $20 million valuation? For example id Software was sold for, rumor has it, 105 million dollars - only 5X the amount, while they generated over $2+ Billion in revenue with their products over time.
- erikpukinskis 16y agoid Software was sold?
- mediaman 16y agoThat price seems very low for an incredible brand franchise and IP rights to Quake, Doom, Wolfenstein, Rage -- only $105mm? An article I picked up on it indicates they had 105 developers at the time of acquisition. I would bet that rumor is false, or that there was some sort of extreme extenuating circumstances that we're not privy to.
- Keyframe 16y agoIt was indeed $105 million as SEC filing showed http://sec.gov/Archives/edgar/data/1092835/000109283509000004/xslFormDX01/primary_doc.xml http://sec.gov/Archives/edgar/data/1092835/00010928350900000... I am pretty sure there were some additional benefits, as in "you don't tell us what to do, ever" or something.
- traskjd 16y agoI thought the $105m was new debt raised? I could be wrong as I'm not used to look at these forms, but I thought the story went that it was AT LEAST $105m because that was the ADDITIONAL raised. I might borrow 100k for a house, doesn't mean I only spent 100k for the house. But, as I say, I could be wrong - I'm not an American so I haven't seen these forms too much :-)
- Keyframe 16y agoI don't know either to be honest, paper says: "Total Offering Amount $105,000,000 USD | Total Amount Sold $105,000,000 USD"
- midnightmonster 16y agoMy reading is that they raised $105 million via convertible notes and promissory notes "in connection with the acquisition of substantially all of the assets of Id Software, Inc.". Traskjd has it right--this might mean they spent $105M on id, or it might mean they only needed to borrow $105M of whatever they spent.
- megablast 16y agoI can't believe it would be that low, unless they were in some trouble, lots of debts. But they are a software house, so that should not happen.
- ajju 16y agoWhat matters is not how much revenue you generated over time in the past, but how much you are generating right now and what the expectation is of future revenues. If you get down to just numbers, the 'standard' way of valuing any enterprise is to calculate the current value of their future cashflow. This is why (many) V.C.s ask you for a revenue projection. It is debatable whether this is the right way of doing things; in the case of most startups it may be the wrong way, but if id Software was making, say, only 10M/year at the point they got bought, and left alone, if their cashflow would have stayed the same or stagnated, 105 million would be 10.5x their yearly profits which is decent.
- SilianRail 16y agoI love how people think they can just "calculate the value of their future cashflow"...isn't this what we are preached to stay away from now? (i.e. Steve Blank's idea on "business model > business plan")
- ajju 16y agoIf you are saying projected cash flows are a bad way of valuing startups, I agree.