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Quick math here: “the aggregate value being paid for FanDuel “is approximately $465m”.” “2014 and 2015 respectively led $70 million and $275m” (345 million)

Quick math here: “the aggregate value being paid for FanDuel “is approximately $465m”.” “2014 and 2015 respectively led $70 million and $275m” (345 million) “Mr King is expected to receive a payment of up to $11.3m as a result of the Paddy Power Betfair deal. The firm’s current chief technology officer Robin Spira is due to make up to $3.5m, its legal officer Christian Genetski stands to make up to $6.2m, and it chief financial officer Andy Giancamilli is due to receive up to $5m” (Those add up to $26 m) So it looks like the investors got just over 7% return on a venture investment. (Which is not an unusual ask for preferred shares).

greglindahl 8y ago
Also note that the retention bonus total is known to be at least 5.5%, it's often the case that up to 10% of the purchase price in these "no money falls on common" deals is paid out to make sure that the deal closes.
- startupdiscuss 8y ago
  Yes, and there are often transaction costs. The bankers that introduced the buyer to the seller, the lawyers that have to go over the deal terms, and the accountants and due diligence people.
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icedchai 8y ago
7%... that’s a sad return. They could’ve done better with more traditional investing.
brudgers 8y ago
The difference is that the returns of a venture capital fund come from the performance of a few portfolio companies. The returns of a private equity fund come from the performance of most companies. Private equity investors, like KKR here, are happy with the 7% premium return because they usually get it from each investment. The 7% return from liquidation preference would be a poor performing investment in a venture capital portfolio. Another way of looking at it is that the hit to reputation that a venture capital firm would take on this outcome isn't worth the 7% return at the expense of founders. The money is in the 10x to 100x deals.
- sonnyblarney 8y ago
  7% is a bad return when you risk-adjust this kind of deal. So many ways it could go wrong. There are less risky ways to make . 7%, with a lot less work.

greglindahl 8y ago

Also note that the retention bonus total is known to be at least 5.5%, it's often the case that up to 10% of the purchase price in these "no money falls on common" deals is paid out to make sure that the deal closes.

startupdiscuss 8y ago
Yes, and there are often transaction costs. The bankers that introduced the buyer to the seller, the lawyers that have to go over the deal terms, and the accountants and due diligence people.

deleted 8y ago

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icedchai 8y ago

7%... that’s a sad return. They could’ve done better with more traditional investing.

brudgers 8y ago

The difference is that the returns of a venture capital fund come from the performance of a few portfolio companies. The returns of a private equity fund come from the performance of most companies. Private equity investors, like KKR here, are happy with the 7% premium return because they usually get it from each investment. The 7% return from liquidation preference would be a poor performing investment in a venture capital portfolio. Another way of looking at it is that the hit to reputation that a venture capital firm would take on this outcome isn't worth the 7% return at the expense of founders. The money is in the 10x to 100x deals.

sonnyblarney 8y ago
7% is a bad return when you risk-adjust this kind of deal. So many ways it could go wrong. There are less risky ways to make . 7%, with a lot less work.