Aha! I had been expecting this one for some time now. Om is reporting (unverified, and I just checked with him on ichat, still unverified) that SixApart is probably raising $12m on a $100m pre-money valuation. Investors could include Intel this time. Is August Capital following as well ?
So, 12 on 100, that’s a 12/112=10.7% for the new guys. If there’s 3 of them, that’s not much right? Let’s say each puts in $4m.
Om is asking VERY rightly so: “The big question is what is the exit for Six Apart. An IPO? That would make sense given their subscription model layered on top of hot-new trend of blogging (at least from Wall Street perspective) and possibility of another “eyeball” revenue stream. But what if no IPO happens? Who buys them? My bet is that it won’t be someone like Yahoo, because the deal is already too rich for Sunnyvale gang. The best fit would of course be someone like News Corp.”
Now, let’s say the exit is at $350m. (just made it up. MySpace went for about 50% more). 1/3 of 10.7% is an 3.5% equity stake. so the new investors are getting a value of $12.5m. Not bad but not great for a $4m investment. only 3x.
I would love to have some answers to these random thoughts:
- what’s the current turnover of SixApart ? I hear through the grapewine they might have c. 150K paying subs (for Typepad, as LiveJournal is free) around the world. If I assume a $7.15 ARPU per month (I’m betting 60% on price plan A, 30% on B, and 10% on C), that’s about $85.8/year, so about $12,9m in revenues for Typepad. Add maybe 10K paying users for MT, at maybe at an average of $250 a copy. That’s $2.5m extra. So basically in the $15m range. Their current valuation would then be in the 6.6x revenues. A bit high if SixApart can’t sustain growth. Anyone care for a deeper analysis ?
- I haven’t seen much innovation on the interface, mobile integration nor web services to enable bloggers to monetize their content.There was an initiative called project COMET announced at some point for early 2006. Enhancing the service is key to keep recruiting customers and keeping marketshare.
- $12m extra doesn’t seem to be a lot, at times when Slingmedia raises a $47m series B, or FON raises a $21.7 series A. What’s the money raised for ? To pay for additional infrastructure (as demonstrated by the recent outages), or to spend in marketing? or to expand to new countries (I understand SixApart is strong today in the USA, France and Japan) ?
To finish, we remember that SixApart raised $10m in october 04, so 16 months ago. A $10m ticket might have meant a $20–30m pre-money valuation (ie. a 25% to 33% dilution round). If it’s now up to $100m, that’s a nice value creation (or should I say valuation creation) in just 16 months. Let’s hope there’s an EBIT comparable somewhere…
update: information confirmed on SixApart's Europen VP, on 16 March 2006 morning. Focus Ventures is joined by Intel Capital & August Capital in this round.