(I don't know any specifics on this case but speaking generally about this type of business)
It could well be that revenue figure includes "pass through revenue" (aka GMV) as the company isn't public they're not required to follow standard accountancy practices (GAAP, etc.) in reporting revenue.
For startups most of their burn rate tends to be salaries and burn rate tends to be greater than revenue. So assuming they have 20 employees and were break-even and an average revenue per employee of between 150-200k that would imply an actual revenue in 3m-4m range which would be in line with the acquisition figure.
They will end the year with $20m revenue and the deal is $20m cash plus incentives. So effectively a 1x deal at the outset, rising to 2x if they meet performance and retention goals.
This seems like a weird acquisition given HeyZap's claims they were profitable since mid-2014.
In the spirit of numerous recent articles, given they raised $8m and were acquired for only $20m cash, this sounds like a bust for everybody but the founders. For example, a 1% pre-A options package fully vested would probably be diluted to roughly .2% (or less!) and is worth $32k. Pretax. Yes there are earnouts but I haven't heard of too many of those being paid.
Also, I hold shares in a private adtech company. The valuations of the handful being acquired or going public aren't propitious for me.
But I'm sure those employees were paid a high salary, so the mediocre return is fine. Right? Right? They totally made more money off this startup than just working at someplace bigger.
[+] [-] ramoq|10 years ago|reply
[+] [-] ig1|10 years ago|reply
It could well be that revenue figure includes "pass through revenue" (aka GMV) as the company isn't public they're not required to follow standard accountancy practices (GAAP, etc.) in reporting revenue.
For startups most of their burn rate tends to be salaries and burn rate tends to be greater than revenue. So assuming they have 20 employees and were break-even and an average revenue per employee of between 150-200k that would imply an actual revenue in 3m-4m range which would be in line with the acquisition figure.
[+] [-] nedwin|10 years ago|reply
[+] [-] zazpowered|10 years ago|reply
[+] [-] sharpshoot|10 years ago|reply
[+] [-] x0x0|10 years ago|reply
In the spirit of numerous recent articles, given they raised $8m and were acquired for only $20m cash, this sounds like a bust for everybody but the founders. For example, a 1% pre-A options package fully vested would probably be diluted to roughly .2% (or less!) and is worth $32k. Pretax. Yes there are earnouts but I haven't heard of too many of those being paid.
Also, I hold shares in a private adtech company. The valuations of the handful being acquired or going public aren't propitious for me.
[+] [-] serge2k|10 years ago|reply
[+] [-] zump|10 years ago|reply