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Facebook acquires Instagram

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Re: Facebook acquires Instagram

#201

Post by marcamillion »

TomGullen wrote: post #196
marcamillion wrote: post #128

Some quick back-of-the-envelope math for how much the co-founders walked away with. Assuming the first round of $500K was @ $2.5M valuation, giving those investors 20%. So the founders are left with 80%. Further assume the 2nd round of $7M @ $20M valuation, giving those investors 35%. So the founders are left with 45%. Further assume the 3rd round of $40M @ $500M valuation, giving those investors 8%. So the founders…

Why do you think the FB stock is likely to appreciate significantly in a few months? If you really believe this, I assume you've just invested a significant chunk of your net worth into FB stocks?

Well.....FB is the poster-child of tech exuberance right now. Everybody uses Facebook. Many of those users will likely want to buy the stock - not for any sophisticated investment thesis. But because they want to own what they use.

That will likely push up demand for the stock in the short-term, thereby the price.

Aside from that, we have never seen a service have 800M users and still growing at the rate that FB is growing and have the stickiness that it has. So there is no telling how big it can get - which is why the valuation is so high.

There is no doubt that over the long term, FB will figure out a way to print money. It's just a matter of time.

Re: Facebook acquires Instagram

#202

Post by joeblau »

Can someone explain how this isn't insider trading?

Day before deal: - Instagram closed a $50 million Series B round from Sequoia, Josh Kushner’s Thrive Capital, Greylock and Benchmark at a $500 million valuation.

Day of deal: - Company gets purchased for 1 billion. - All investors instantly double investment.

Re: Facebook acquires Instagram

#203

Post by omfut »

marcamillion wrote: post #128

Some quick back-of-the-envelope math for how much the co-founders walked away with. Assuming the first round of $500K was @ $2.5M valuation, giving those investors 20%. So the founders are left with 80%. Further assume the 2nd round of $7M @ $20M valuation, giving those investors 35%. So the founders are left with 45%. Further assume the 3rd round of $40M @ $500M valuation, giving those investors 8%. So the founders…

According to wired, Kevin Systrom owned 40%, while mike owned 10%. http://www.wired.com/epicenter/2012/04/facebook-buys-instagr...

Re: Facebook acquires Instagram

#205

Post by mkr-hn »

What's really interesting to me is that they have a flood of geolocated pictures of places now. And they have a partnership with Microsoft. Photosynth integration on Instagram with all your photos would be amazing.

Re: Facebook acquires Instagram

#206

Post by 3pt14159 »

marcamillion wrote: post #128

Some quick back-of-the-envelope math for how much the co-founders walked away with. Assuming the first round of $500K was @ $2.5M valuation, giving those investors 20%. So the founders are left with 80%. Further assume the 2nd round of $7M @ $20M valuation, giving those investors 35%. So the founders are left with 45%. Further assume the 3rd round of $40M @ $500M valuation, giving those investors 8%. So the founders…

You are not accounting for liquidation preference correctly. When someone gets a 1x liquidation preference first they get their money back, then they get an equal portion to what is left. So in the case of the 3rd round, first they got their $40M back, but they retained 8% of the pool. Same with the 7M etc. Call it $50M off the billion right off the bat, leaving 950 million. Doesn't really dent the number (reduction of 5% for the founders, so they each walk away with $128M, but that is still 7 million less). Also, this assumes no advisors got shares or board members got shares and that really early hires got no shares outside of the ESOP, which is unlikely). I would guess they probably each walked away with $100M after everything was said and done.

Re: Facebook acquires Instagram

#207

Post by damoncali »

rhizome wrote: post #94
jsm386 wrote: post #9

According to WSJ price is $1B source: http://allthingsd.com/20120409/breaking-facebook-to-acquire-... Edit: Direct Source: http://newsroom.fb.com/Announcements/Facebook-to-Acquire-Ins... The total consideration for San Francisco-based Instagram is approximately $1 billion in a combination of cash and shares of Facebook. The transaction, which is subject to customary closing conditions, is expected to close later this…

What are the odds that that figure is actually in real dollars?

Zero - it's being reported as a partial stock deal, which (speculation coming...) probably has some sort of performance based component (the word "earn-out" hardly seems appropriate here.)

Re: Facebook acquires Instagram

#208

Post by knowsnothing613 »

marcamillion wrote: post #193
FireBeyond wrote: post #154

Earlier quoted context omitted.

And people say we're not in another bubble. People through comments saying things like "well, VCs needed to double their investment - this lets them do it in a few months" Wish I lived in a world where I should have expectations of a several hundred percent ROI on investments.

You are just seeing the good cases here. A 10X return on any one investment pays for all the bad investments. If I remember correctly, the return that Sequoia got on their YouTube investment paid for the entire portfolio many times over. But more importantly than that, I think it was one of a very few that were good in that fund. I believe that particular fund was particularly bad because it contained remnants of the…

yeah, but they paid $1 BILLION dollar for a company with NO business model.

This buy was just another way for connected Silicon players to cash out on the facebook IPO, since the IPO window for web 2.0 is closed.

Re: Facebook acquires Instagram

#209

Post by mattmanser »

marcamillion wrote: post #193
FireBeyond wrote: post #154

Earlier quoted context omitted.

And people say we're not in another bubble. People through comments saying things like "well, VCs needed to double their investment - this lets them do it in a few months" Wish I lived in a world where I should have expectations of a several hundred percent ROI on investments.

You are just seeing the good cases here. A 10X return on any one investment pays for all the bad investments. If I remember correctly, the return that Sequoia got on their YouTube investment paid for the entire portfolio many times over. But more importantly than that, I think it was one of a very few that were good in that fund. I believe that particular fund was particularly bad because it contained remnants of the…

You need some serious perspective, they just got 2x return in a few months. They can, I don't know, re-invest the money perhaps?

And you're cherry picking out one of many Sequoia funds (and still a successful one at that) to point at to call VC life hard? A dot-com period fund as well?

How many other hit funds have they had?

Sequoia estimates that 19% of the NASDAQ’s value is made up of firms they have funded.

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