LiveDeal.com raised $4.85M in its second round in October 2005. If everything we read about VCs are true, that’s a low return on their investment.
I don’t know what the valuation was at the time of that second funding, but according to Alarm Clock and reported by Paid Content, today it sold to Yellow Pages (ticker: YPNT) for roughly $12M - or 15M shares of YP @ $0.80 per share.
Yellow Pages has a $40M market cap, an enterprise value of $31M and 50M shares, so LiveDeal will have a 25% stake. It will remain independent, but LiveDeal’s founder, a former eBay engineer named Rajesh Navar, will become President of YP and join its board:
“We expect to become the first company to fuse relevant Yellow Pages and classifieds listings into a powerful, fast growing online local search marketplace helping buyers and sellers in local communities connect with one another quickly and effortlessly. For me personally, it is an eBay opportunity all over again. This combination has created a company that has strong management, profitability and a fast growing $30 billion local advertisement market opportunity.”
A $12M exit is not too shabby, but given the previous funding, to quote A:C, this is “not a mind-blowing return” and I’m frankly surprised about the deal low return for the investors but do give credit for Navar’s vision in making 1+1=3. And, while there is a lot of upside for the stock, it is, after all, trading at $0.80!
Navar is not “some kind in a basement either.” According to the Form 8-K which outlines an ”Entry into a Material Definitive Agreement, Completion of Acquisition or Disposition of Asset”:
Mr. Navar brings to the Company over 16 years of experience in building high technology and Internet companies. As an original member of the engineering and management teams at eBay and other Internet companies, Mr. Navar is one of the pioneers in e-commerce. Prior to founding LiveDeal, Mr. Navar joined eBay in 1998, a start-up at that time, as a senior member of the engineering team. Mr. Navar founded and built eBay’s search technology, helping build eBay into one of the world’s most successful and profitable e-commerce companies. In September 2005, Mr. Navar was honored among Silicon Valley Business Journal’s chronicle of “40 under 40″ people to watch.
Classifieds is a booming business (disclaimer: Mojo Supreme has a classifieds product that we’ve yet to launch):
Classifieds is a $30B sector and is the 3rd largest Internet ad category, with 18% of online ad spending says the IAB.
I think the $30B figure is actually regarding local advertising, and not classifieds, but at this rate: whatever. All of these estimates are making things blurry. Point is: the web is really steamrolling and I can attest to one thing: I am clinically now attached to my laptop and I can’t recall when was the last time I turned on my TV (I still have one, dear, right?).
Of course, all of this brings a lot more competition: Craigslist and eBay are the main players but there are countless of smaller players. And, yes, all newspapers inevitably are natural potential leaders if they get their acts together.
Note to self: bump up the to-do list: launch classifieds…
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