8783

Zynga Series A returns are massive

Secondary sales give 114X cash on cash - IPO much more for Reid Hoffman

Financial trends and news by Lorenzo Carver
July 1, 2011 | Comments
Short URL: http://vator.tv/n/1c46

Series A Cash On Cash IPO Issue Price Returns Comparison

Zynga's Series A return may be one of the biggest for a venture backed IPO since Google.  By selling their early Series A shares Foundry Group (Boulder, Colorado) and Union Square Ventures (New York City) already generated cash on cash returns of 114X, well over an 11,000% total return, on their Series A investments in Zynga.  

Of the original Series A investors it appears that only LinkedIn founder Reid Hoffman didn't participate in the secondary sale/repurchase.  If Zynga’s IPO prices as expected, at or above $20 billion, Mr. Hoffman will realize 5X the return of other Series A investors as a result of not selling earlier.  That’s roughly 577X Mr. Hoffman’s 2007 investment in the company.

But don't feel bad for Foundry or Union Square, both should make another 260 times their money along with San Diego based Avalon Ventures on Zynga's Series A-1, plus another 77 times the cash both invested in the Zynga's Series B round, led by Institutional Venture Partners (Sand Hill Road, Menlo Park, California) and Kleiner Perkins Caufield & Byers (KPCB, (Sand Hill Road, Menlo Park, California). 

The chart below illustrates how these astonishing returns compare to other venture backed benchmarks based on their respective issue prices, not their IPO first day closing prices which are often substantially higher for VC backed tech companies.  The comparisons in the chart are Google's IPO original issue price of $85 per share divided by their Series A price, LinkedIn’s IPO offer price of $45 per share divided by their A price, Yahoo!’s IPO as priced at $13 per share and the Microsoft’s $20 per share original issue price divided by the deemed price for the single round of preferred stock they issued to the sole VC on the deal.

Naturally the Zynga return multiple results have to assume an issue price, since the company is not public yet.  Here it’s based on the $20 Billion number being quoted by many.  But even if it were half that value, these are still amazing cash on cash returns generated during the worst financial crisis in recent history.  

 

Cash on Cash Returns on Series A Investments Google Series A, Zynga Series A, LinkedIn Series A, Microsoft Preferred, Yahoo! Series A

**All Zynga IPO estimates are preliminary, based on imported data from SEC filings, brought into Liquid Scenarios and is subject to errors.  Chart Source:  LiquidScenarios.com

 Lorenzo Carver, MS, MBA, CVA, CPA is the Founder and CEO of Liquid Scenarios and author the John Wiley and Son's book "Venture Capital Valuation."


Related companies, investors and entrepreneurs

Plogo_zynga_zynga-logo-for-screen-v2
Zynga
Startup/Business
Description: Zynga is the largest social gaming company with 8.5 million daily users and 45 million monthly users.  Zynga’s games are avail...
3197
Liquid Scenarios
Startup/Business
Description: Since founding bpCentral, our focus has been on increasing each user's competitive advantage each and every time they interact with one o...
17990
Reid Hoffman
Partner,
Greylock
Bio: Angel investments and exits:Advent Solar (acquired by Applied Materials) Aviary (funded) Bioscale (funded) Buysight (acquired by Advertis...
5726
Fred Wilson
Managing partner,
Union Square Venture...
Bio: I am a VC
Bio: Brad has been an early stage investor and entrepreneur for over 20 years. Prior to co-founding Foundry Group, he co-founded Mobi...
12951
Mark Pincus
Founder and CEO,
Zynga
Bio: Mark Pincus is a leading Internet entrepreneur, having founded and established four successfulcompanies.  His latest venture Zynga, ...
8783
Lorenzo Carver
CEO,
Liquid Scenarios
Bio:     Lorenzo Carver, MS, MBA, CPA/ABV, CVA, is the inventor of bpCentral's Carver Import Algorithm, which enables impo...

Related news

3502_brandon-duncan-linkedin.flv_lthumb

LinkedIn gets $1 bln valuation on way to IPO

Financial trends and news by John Shinal

171109125722picture_1

Zynga raises $15.18 million

Social gaming giant raking in more cash

Financial trends and news by Chris Caceres


blog comments powered by Disqus