One of the highest profile liquidity events to date in 2012 is Facebook’s announced deal to acquire Instagram for $1 billion. The popular mobile photo-sharing service should fit well into Facebook’s growth strategy as a soon-to-be-public company, but its eye-popping valuation — more than that of the New York Times, for those keeping score at home — is made more extraordinary by the fact that Instagram is run by only 13 employees.
Setting aside questions of unique strategic value for the moment, what could possibly make Instagram worth ten figures? Brand recognition, goodwill, user loyalty, mushrooming usage metrics, sure — but perhaps most importantly, a mountain of intellectual property. My quick-and-dirty assessment, based on pure speculation with no inside knowledge, produced the following taxonomy: Read more
If you startup is your dream, why would you want to think about an exit? It’s going to be so successful and so much fun that you don’t need to think about what comes after. Wrong. There are two very real and practical reasons why you need to plan an exit: Read more
In the “good old days,” angels invested in seed-stage startups and teed up promising companies for subsequent venture capital financing. If the company was successful, this quickly led to an IPO – a very happy ending for the entrepreneur, the angels, and the venture capitalists. My, my…how the world has changed. Read more
Oddly, perhaps, one of the most difficult decisions entrepreneurs face arises once the company begins to succeed. That’s usually when the first really “strategic” potential investors start to show up, presenting the question: sell a big chuck (or all) of the company at today’s valuation, or double down and go for the life-changing money? Read more