6 ms·

Quite a jump from the $500 million valuation they were shooting for last week[1]. [1]http://techcrunch.com/2012/03/08/no-filter-required-instagram-reportedly-r

Quite a jump from the $500 million valuation they were shooting for last week[1]. [1]http://techcrunch.com/2012/03/08/no-filter-required-instagram-reportedly-raising-40m-at-500m-valuation/ http://techcrunch.com/2012/03/08/no-filter-required-instagra...

jonursenbach 15y ago
Wonder if there was a bidding war between FB and Google that caused it to double off of that.
- redthrowaway 15y ago
  I think something like that had to have happened for the valuation to get so high. Apple may have been in the hunt as well, given their propensity for acquiring popular iOS apps and rolling the functionality into vanilla iOS.
  - marcamillion 15y ago
    The valuation wasn't all that high. It was just twice that of the last round. In order for the investors that just came in to get any sufficient return on their investment, they had to at least double their money. Ignore, for a second, that it was just 1 month (or 1 night as Techcrunch suggests) - it doesn't matter. The purchase price is usually determined based on the latest round of financing.
    - _delirium 15y ago
      The $500m-valuation round happened so close to the buyout, though, that it's quite possible the investors in that round knew of pending offers, which then increased the valuation. So if that round's valuation itself then increased the buyout's valuation, that's a neat bit of circularity.
- nilsbunger 15y ago
  I don't know, but I wouldn't jump to that conclusion. The Instagram team was still growing its user base by leaps and bounds. I would guess they're in no hurry to sell. FB's "competition" for the deal could've just been Instagram's continued organic growth.
- Steko 15y ago
  Obligatory Google+ momentum check: http://www.google.com/insights/search/#q=Google%2B%2CInstagram%2CPinterest%2CReddit%2CLinkedIn&date=8%2F2011%209m&cmpt=q http://www.google.com/insights/search/#q=Google%2B%2CInstagr... "Mr. Silbermann, Larry Page is on line 1"
- celebration 15y ago
  It's interesting that alot of people are concerned with FB vs Google. My initial thought when hearing about this deal was that FB could be more worried about Twitter. In my personal experience, many people will share instagram photos on twitter rather than Facebook as it comes across as less "spammy" to share photos frequently. Certainly, IMO, the subscribe feature that FB introduced last year was a reaction to the celebrity cult on Twitter. Granted, Mark claims that the acquisition of instagram will not affect the ability to share to other social networks, but I'm sure they will try to make FB the preferred platform to post photos as a daily update. It will be interesting to see if Twitter suffers a drop in photo sharing as a result.
marcamillion 15y ago
I think the mere fact that they just raised $50M @ $500M valuation is the reason that this price is so high. Those investors in that round had to at least double their money...if the price was indeed $1B, that's all they did. Just 2X. Although, the argument can be made that a 2X return in 1 - 2 months isn't bad...but then again, VC funds don't have a 2 month life, so over the long-term value (i.e. 10 years most-times) of that fund I am not sure how beneficial that is. Although, I guess they can't be too pissed because it must feel good to be able to at least return something to their LPs in such a short time frame.
- nirvana 15y ago
  The acquisition was in stock and cash. So the VCs that put up the $50M may have just gotten $100M in pre-IPO Facebook stock, which may well dramatically increase their return post IPO.
  - marcamillion 15y ago
    Ahhh....good point. That does change the formula a bit, but even still...what's the likely 1 year return on pre-IPO FB stock? 3X if so much? I doubt it. Anyway, it's better than 2X, so I guess they can't be pissed.
    - MaysonL 15y ago
      But, quite possibly, it could be .5X, or .25X... Current FB valuation is somewhere around 25X revenue ...
      - jcitme 15y ago
        Honestly, in the tech industry, a 25 P/E ratio is yawned at.
      - dkrich 15y ago
        P/E is around 100.
  - 15y ago
mkramlich 15y ago
It's because they doubled their revenue since last week. Oh, that's right. Revenue doesn't matter. "This time, it's different!"

jonursenbach 15y ago

Wonder if there was a bidding war between FB and Google that caused it to double off of that.

redthrowaway 15y ago
I think something like that had to have happened for the valuation to get so high. Apple may have been in the hunt as well, given their propensity for acquiring popular iOS apps and rolling the functionality into vanilla iOS.
- marcamillion 15y ago
  The valuation wasn't all that high. It was just twice that of the last round. In order for the investors that just came in to get any sufficient return on their investment, they had to at least double their money. Ignore, for a second, that it was just 1 month (or 1 night as Techcrunch suggests) - it doesn't matter. The purchase price is usually determined based on the latest round of financing.
  - _delirium 15y ago
    The $500m-valuation round happened so close to the buyout, though, that it's quite possible the investors in that round knew of pending offers, which then increased the valuation. So if that round's valuation itself then increased the buyout's valuation, that's a neat bit of circularity.
nilsbunger 15y ago
I don't know, but I wouldn't jump to that conclusion. The Instagram team was still growing its user base by leaps and bounds. I would guess they're in no hurry to sell. FB's "competition" for the deal could've just been Instagram's continued organic growth.
Steko 15y ago
Obligatory Google+ momentum check: http://www.google.com/insights/search/#q=Google%2B%2CInstagram%2CPinterest%2CReddit%2CLinkedIn&date=8%2F2011%209m&cmpt=q http://www.google.com/insights/search/#q=Google%2B%2CInstagr... "Mr. Silbermann, Larry Page is on line 1"
celebration 15y ago
It's interesting that alot of people are concerned with FB vs Google. My initial thought when hearing about this deal was that FB could be more worried about Twitter. In my personal experience, many people will share instagram photos on twitter rather than Facebook as it comes across as less "spammy" to share photos frequently. Certainly, IMO, the subscribe feature that FB introduced last year was a reaction to the celebrity cult on Twitter. Granted, Mark claims that the acquisition of instagram will not affect the ability to share to other social networks, but I'm sure they will try to make FB the preferred platform to post photos as a daily update. It will be interesting to see if Twitter suffers a drop in photo sharing as a result.

marcamillion 15y ago

I think the mere fact that they just raised $50M @ $500M valuation is the reason that this price is so high. Those investors in that round had to at least double their money...if the price was indeed $1B, that's all they did. Just 2X. Although, the argument can be made that a 2X return in 1 - 2 months isn't bad...but then again, VC funds don't have a 2 month life, so over the long-term value (i.e. 10 years most-times) of that fund I am not sure how beneficial that is. Although, I guess they can't be too pissed because it must feel good to be able to at least return something to their LPs in such a short time frame.

nirvana 15y ago
The acquisition was in stock and cash. So the VCs that put up the $50M may have just gotten $100M in pre-IPO Facebook stock, which may well dramatically increase their return post IPO.
- marcamillion 15y ago
  Ahhh....good point. That does change the formula a bit, but even still...what's the likely 1 year return on pre-IPO FB stock? 3X if so much? I doubt it. Anyway, it's better than 2X, so I guess they can't be pissed.
  - MaysonL 15y ago
    But, quite possibly, it could be .5X, or .25X... Current FB valuation is somewhere around 25X revenue ...
    - jcitme 15y ago
      Honestly, in the tech industry, a 25 P/E ratio is yawned at.
    - dkrich 15y ago
      P/E is around 100.
- 15y ago

mkramlich 15y ago

It's because they doubled their revenue since last week. Oh, that's right. Revenue doesn't matter. "This time, it's different!"