Skype Journal: What next Howard?
September 16, 2005 12:02 PM
I remember Howard telling me the story of tracking down Skype. I was certainly envious, I learned he had almost a year to work with the lads before I downloaded the first version. Having met Niklas and Howard, it was easy to see how this hidden partnership worked. I've learnt a lot as a result and about how Silicon Valley works. Congratulations Howard! It's quite a story.
Together with his partner (Howard) Hartenbaum, Draper invested about $250,000 into Skype in late 2002. They became the first outside investors, and enjoyed a 5 percent stake. (And while the exact numbers aren't known, they invested when Skype was valued at less than $2 million -- meaning they've seen close to a thousandfold return.) MercuryNews.com | 09/15/2005
So what next Howard? Will the ecosystem get some investments? I'm ready to talk the next big thing!
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Comments (3)
Something about the numbers does not make sense. They invested 250K for 5% while that 250K represented 12.5% of the valuation of 2 Million?
Also, if they had 5% of the company for 250K, this means that they got 5% of the 2.6 Billion which is 130 Million or 520 times the original investment in turn.
Still impressive, but there seems to be exaggeration in the press once again.
Posted by: MuppetMaster at September 16, 2005 12:32 PM
Hi Muppet,
I did the same math as you. I used what was printed. I don't know about the orginal valuation. In any case this is a great return.
Posted by: Stuart Henshall at September 16, 2005 12:46 PM
Based on this:
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Shareholders representing about 60% of Skype's shares opted to receive a reduced up-front payment in cash and eBay stock at the close of deal, plus the possibility of the additional $1.5 billion. The remaining Skype shareholders decided to receive a single payment in cash and eBay stock upon completion of the transaction.
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It would appear that VCs had 40% of Skype.
Posted by: MuppetMaster at September 20, 2005 10:06 AM