UPDATE: I just got a call from someone close to Elevation Partners who walked me through the numbers. Bottom line: Elevation expects to receive $485 million from the HP deal for the $460 million it invested.
Why? The original $325 million that Elevation invested was guaranteed in the event of an exit. In other words, out of the $1.2 billion that HP is paying, Elevation get made whole for that $325 million. Through in the other warrants and other convertible stock, and Elevations winds up with $485 million.
Worth noting: That also means that common shareholders will be getting much less than the $5.70 per share being touted in press releases.
The common shareholders still get $5.70 per share, a figure calculated after Elevation’s payout is backed out.
At first glance, it’s hard to say for sure whether Elevation Partners will take a hit or just about break even on its Palm investment. On Wednesday, Hewlett-Packard said it was buying Palm for $1.2 billion, or $5.70 per share.
Elevation is Silicon Valley’s big buy-out firm whose investors include Bono of U2 fame and noted venture capitalist Roger McNamee. For a good overview of Elevation, check out this TechCrunch post from a few weeks ago. Palm was one of its biggest bets.
“The size of the round is in the $50 million range, but includes both a primary investment component as well as a secondary offering for long time employees. These deals are now being referred to as ‘DST deals,’ since DST first invested in Facebook in May 2009 at a $10 billion valuation and later funded employee buyouts at a $6.5 billion valuation. They did a similar deal with Zynga.”
In other words, part of the investment will allow long-time employees to cash out options. Same deal with Facebook and Zynga. But why? Read the rest of this entry »
I spent last Friday night at the Herbst Theater in San Francisco watching the Crunchies. The third annual version of the tech award show was co-hosted by three leading high-tech blogs: GigaOm, VentureBeat, and TechCrunch. According to the official Cruchies description, the show aims to “recognize and celebrate the most compelling startups, internet and technology innovations of the year.” You can read a nice overview of the event and after-party by Jessica Guynn of the Los Angeles Times.
It was an entertaining, if low budget, affair. In fact, the casual nature of the show in such a fancy space was quite charming. There were corporate jugglers providing entertainment and the reliably funny Richter Scales served up a nice glee-club style spoof (see video above).
I was truly amazed at the overwhelmingly negative feedback from the TechCrunch community about his decision. You can see the harshness continue on Twitter here.
I attended an intriguing dinner in Woodside last night.
The dinner was ostensibly to promote a new wireless router being launched by FON, a Spanish company. The router — dubbed the Fonera 2.0 — is somewhat interesting, adding some neat features that most comparable devices don’t have, such as the ability to upload files to the Internet while your computer is turned off and the ability to offer — and make money off of — a public hot spot without granting the hoi polloi access to files on you home network.
But the dinner was much more interesting for who attended than the product that inspired it. The guest list was a notable cross section of the digerati and tech blogosphere. Among those present: Tech Crunch founder Michael Arrington; Scobleizer’s Robert Scoble; Ryan Block, a former editor at Engadget and more recently the founder of Gdgt, a new tech “community” site; Randi Zuckerberg, sister of Facebook founder Mark Zuckerberg and a marketing manager at the social networking company; Dave Morin, Facebook’s senior platform manager; and Jeff Clavier, founder and managing partner of SoftTech VC. Read the rest of this entry »
I recently had a chance to meet and talk with Loic Le Meur, the entrepreneur behind Seesmic. So I was sorry to hear that he had to lay off seven of his employees on Friday.
I spent some time at TechCrunch50 last week after profiling founder Michael Arrington. My colleague, Troy Wolverton, made the trek to San Diego for DEMOfall08. Check out his take here and here.
The rivalry between these two shows created some heat in the past couple weeks with some wondering whether all of this was good for the entrepreneurs who were supposed to be on display at these shows.
So I wanted to offer one other thought from someone who attended Demo this year. Sudha Jamthe, an entrepreneur and social media consultant, said that this year’s Demo show was the best in years. And she wonders whether the competition from TechCrunch gave Demo more focus and energy.
In an e-mail, she wrote:
“I am back from demofall and wanted to send a personal note as I think you are one person who can see my mixture of excitement for startups and the emotions from the conference audience.
I launched my first startup at demo in 2000 and knew it was unique but could not articulate it except for logical factors liked Vcs, media and corp dev folks come there but I got it this time.
Its the focus on the entrepreneurs and the energy they bring to the conference.
I tried to capture some of the audience tempo with my flip camera, there were many cool companies.
At the closing dinner one person started it and all 72 entrepreneurs spontaneously decided to take 6 sec to explain their loyalty to demo. I managed to grab Chris Shipley’s cell and do a Qik stream of it here.
Entrepreneurs have taken a risk by choosing demo vs tc50 and so it showed when they felt they had a successful launch experience. I think TC50 has helped revive demo and bring everyone together with pointed laser-like focus on the entrepreneurs.”
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