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$50M means a valuation at least north of $150M I just don't see how this gets to that sum. How is this a sustainable business at the kind of scale needed to 10

$50M means a valuation at least north of $150M I just don't see how this gets to that sum. How is this a sustainable business at the kind of scale needed to 10x a $50M investment? Especially by KP? #Bubblesignal

dclusin 7y ago
It's pretty hard to ascertain the value of a company and the required exit size from a a single investment round's size alone. There could be warrants to buy more stock, liquidation preferences, ratchets, etc. The math from this alone can get pretty tricky. This seems like a revenue generating company from the get-go, unlike something like facebook, so I suspect they already have revenue and it's growing pretty fast. Given America's (and other countries too) fascination with Celebrities, I could see this as a pretty highly valued company.
- sonnyblarney 7y ago
  Finding the 'technical value' of things can be tricky, as you say with all the special features of a deal. But in general, it's actually fairly straightforward. Investors are usually looking to take x% ownership, ballpark in a round, and they are all looking for at least a 10x return. Technicalities of deals vary, but in the end, a 'round' of investors may get 10-30% and they have big expectations for returns, otherwise it's not worth it. Given the paths to liquidity are IPO or 'get acquired', I'm hard pressed to see the logic on this one. How many pure media companies have done major IPO's based on hard, forecastable metrics lately? And what kind of 'big pockets' company would be interested in making a $500M-$1B acquisition of such a thing? Disney? I don't think so really. I can certainly see the founders making some kind of 'big story' about what they are going to do, but the essentials of what they are doing is not great. I don't see how the experience will be protected, I don't see a lot of competitive advantage, I don't see how they get to the kinds of sales required for those massive valuations, and of course this has a lot of 'fad risk'.

dclusin 7y ago

It's pretty hard to ascertain the value of a company and the required exit size from a a single investment round's size alone. There could be warrants to buy more stock, liquidation preferences, ratchets, etc. The math from this alone can get pretty tricky. This seems like a revenue generating company from the get-go, unlike something like facebook, so I suspect they already have revenue and it's growing pretty fast. Given America's (and other countries too) fascination with Celebrities, I could see this as a pretty highly valued company.

sonnyblarney 7y ago
Finding the 'technical value' of things can be tricky, as you say with all the special features of a deal. But in general, it's actually fairly straightforward. Investors are usually looking to take x% ownership, ballpark in a round, and they are all looking for at least a 10x return. Technicalities of deals vary, but in the end, a 'round' of investors may get 10-30% and they have big expectations for returns, otherwise it's not worth it. Given the paths to liquidity are IPO or 'get acquired', I'm hard pressed to see the logic on this one. How many pure media companies have done major IPO's based on hard, forecastable metrics lately? And what kind of 'big pockets' company would be interested in making a $500M-$1B acquisition of such a thing? Disney? I don't think so really. I can certainly see the founders making some kind of 'big story' about what they are going to do, but the essentials of what they are doing is not great. I don't see how the experience will be protected, I don't see a lot of competitive advantage, I don't see how they get to the kinds of sales required for those massive valuations, and of course this has a lot of 'fad risk'.