Full disclosure: I work for Forkly (http://forkly.com), a FoodSpotting competitor.
I think that it was probably an okay exit for the founders (but definitely no homerun), and for most of the early angels. As for BlueRun Ventures (who put in the bulk of the last round), it probably wasn't that good of a return.
Of course, these exits often don't get paid out based on equity, but on some negotiated deal that will make investors at least somewhat happy. As for the founders, I'm pretty sure they got signing bonuses, probably tied to staying at OT for a year or two.
It will be interesting to see what happens to FoodSpotting (apparently it will stay standalone), and how OpenTable will make use of it.
Big congrats to any team that has an exit. Sure, I think early angels and Dave McClure probably got better returns on their money than BlueRun ventures(I'm guessing this). And most employees probably didn't get much. But food being so saturated with so many different players makes this a respectable exit. Nothing is worst than spending our valuable time on this planet on something that goes nowhere, with this exit, Foodspotting is ensured to be around as long opentable is around. Which is something any founder should be proud of.
Until opentable can actually get reservations right, it sounds pretty irrelevant to me. EVERY time I've tried to get reservations on opentable, they're either not available for 2+ hours, or not available at all. Then when I call, they invariably have tables for every time slot. Basic functionality is missing here...
This is by design. Restaurants will sometimes only give OpenTable a few slots a night as OT often takes a good chunk of margin from the restauranteurs:
'The access fees can be substantial, particularly for restaurants operating on thin margins. One independent study estimates that OpenTable’s fees (comprised of startup fees, fixed monthly fees, and per-person reservation fees) translate to a cost of roughly $10.40 for each “incremental” 4-top booked through OpenTable.com. To put that in perspective, consider that the average profit margin, before taxes, for a U.S. restaurant is roughly 5%. This means that a table of 4 spending $200 on dinner would generate a $10 profit. In this example, all of that profit would then go to OpenTable fees for having delivered the reservation, leaving the restaurant with nothing other than the hope that that customer would come back (and hopefully book by telephone the next time).'
Call it a chop. The founders will stay as long as they need to vest and move on to something else bigger and better. An exit is still an exit and that's enough cachet to get funding for another project.
What's more interesting to me is whether Yelp wanted in on the action. As they move towards more discretionary data and including menu information while letting people review individual menu items this would have been a no brainer for $10MM.
That's the real buried lede. Something's up, either Yelp fumbled or Foodspotting as a concept and database just wasn't valuable at all.
But "tech journalism" being "tech journalism" we just get reblogged PR puffs. The gossipy comments were more interesting than the article itself.
Two years since their Series A suggests that they were at or very near the end of their runway. An exit is an exit is an exit, but from my perspective it looks like this is a larger-scale acquihire.
edit: oh yeah, I should mention that I was (past tense) a founding engineer at a company that (I guess technically) competes with FoodSpotting. But, FWIW, I haven't worked there in a year.
Massive Yay. Growth was likely stalled or slow, they had no revenue, and were running out of runway. The investors are getting their money back, and the founders are getting checks for $1M+.
Who are we to judge the motivations of the founders and investors? Everyone has different priorities and goals for their careers. We have no basis for saying "yay or nay".
According to Crunchbase, they raised $3,750K. http://www.crunchbase.com/company/foodspotting
I would roughly guess their 3 mln A round would be around 10 million valuation. So then the exit would be oke, but not super: No raise in valuation since its A round.
[+] [-] hiroprot|13 years ago|reply
I think that it was probably an okay exit for the founders (but definitely no homerun), and for most of the early angels. As for BlueRun Ventures (who put in the bulk of the last round), it probably wasn't that good of a return.
Of course, these exits often don't get paid out based on equity, but on some negotiated deal that will make investors at least somewhat happy. As for the founders, I'm pretty sure they got signing bonuses, probably tied to staying at OT for a year or two.
It will be interesting to see what happens to FoodSpotting (apparently it will stay standalone), and how OpenTable will make use of it.
[+] [-] dmor|13 years ago|reply
[+] [-] iusable|13 years ago|reply
How do you see this space moving forward? I wonder if there are a lot of 'nice-to-have' and not enough 'must-have' apps, if any at all.
[+] [-] salimmadjd|13 years ago|reply
[+] [-] unstoppable|13 years ago|reply
[+] [-] kareemm|13 years ago|reply
'The access fees can be substantial, particularly for restaurants operating on thin margins. One independent study estimates that OpenTable’s fees (comprised of startup fees, fixed monthly fees, and per-person reservation fees) translate to a cost of roughly $10.40 for each “incremental” 4-top booked through OpenTable.com. To put that in perspective, consider that the average profit margin, before taxes, for a U.S. restaurant is roughly 5%. This means that a table of 4 spending $200 on dinner would generate a $10 profit. In this example, all of that profit would then go to OpenTable fees for having delivered the reservation, leaving the restaurant with nothing other than the hope that that customer would come back (and hopefully book by telephone the next time).'
From http://insidescoopsf.sfgate.com/blog/2010/10/18/is-opentable...
[+] [-] enjo|13 years ago|reply
[+] [-] brianbreslin|13 years ago|reply
[+] [-] alaskamiller|13 years ago|reply
What's more interesting to me is whether Yelp wanted in on the action. As they move towards more discretionary data and including menu information while letting people review individual menu items this would have been a no brainer for $10MM.
That's the real buried lede. Something's up, either Yelp fumbled or Foodspotting as a concept and database just wasn't valuable at all.
But "tech journalism" being "tech journalism" we just get reblogged PR puffs. The gossipy comments were more interesting than the article itself.
[+] [-] kareemm|13 years ago|reply
Before fundraising: 84%: 3 Co-founders @ 28% each 16%: option pool
1st round - $750k @ $3.75M post. No liquidation prefs or ratcheting. Now the cap table looks like this:
67.2%: 3 Co-founders @ 22.4% each 12.8%: option pool 20%: Angels
2nd round - $3M @ 10M post. 1x straight preferred liquidation pref (not participating), no ratcheting.
Cap table:
47.04%: 3 co-founders @ 15.68% each 8.96%: option pool 14%: Angels 30%: Blue Run
A $10M exit looks like this: $3M: Blue Run $4.70M: 3 co-founders @ $1.568M each $896k: option pool payout $1.4M: Angels
Not bad, not great, but that assumes no participating preferred preference, which would have everybody but Blue Run doing a heck of a lot worse.
[+] [-] aaronbrethorst|13 years ago|reply
edit: oh yeah, I should mention that I was (past tense) a founding engineer at a company that (I guess technically) competes with FoodSpotting. But, FWIW, I haven't worked there in a year.
[+] [-] jcampbell1|13 years ago|reply
[+] [-] awolf|13 years ago|reply
[+] [-] argumentum|13 years ago|reply
[+] [-] PanMan|13 years ago|reply
[+] [-] unknown|13 years ago|reply
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[+] [-] masiello|13 years ago|reply