Congratulations to the many, many people involved in growing LOVEFiLM to the point where it had to be bought by either Netflix or Amazon. It seems Amazon won the race which will give it a significant advantage in the battle to dominate the market in Europe.
The acquisition is rumoured to value the company at $312 million.
I blogged earlier this week about Plastic Logic and the perils of early stage and VC investors investing in the creation of new industries – very expensive, always takes longer than you expect and requires HUGE amounts of cash. The LOVEFiLM story is a classic example of where early stage and VC can get it right.
LOVEFiLM was formed with angel cash through individual angels and Arts Alliance initially and soon got VCs – DFJ, Index Ventures and Balderton – on board. It acquired a number of competing businesses early on and has since then got on with the fairly boring job of executing brilliantly ever since. It also acquired Amazon’s European DVD rental business three years ago. It was always going to be an acquisition target for a major US player wanting to move into the UK and European markets and Amazon were the most likely buyer given their shareholding in the business.
The LOVEFiLM website outlines key dates:
- 2004 – LOVEFiLM founded with VC backing to create European online DVD rental business
- 2005 – LOVEFiLM launches the first UK mass market movie download service
- 2006 – LOVEFiLM merges with Video Island and Screen Select to create Europe’s largest online DVD rental business
- 2008 – LOVEFiLM Acquires Amazon’s UK and German DVD Rental Business; Amazon becomes major shareholder
- 2009 – LOVEFiLM breaks through 1 MILLION subscribers
- 2010 – LOVEFiLM launches major streaming services including direct-to-TV service with SONY and SAMSUNG
We understand LOVEFiLM has made money for angel investors, VCs, founders, executives and also shareholders in some of the businesses like Video Island which were part of its earlier roll up. A great case study in how a company can return money to all of its investors.
The company website does not contain information about the acquisition but it has been widely reported in the press, for example.
ecommerce is set to be one of the busiest sectors for M&A activity in 2011. Our next BLN ecommerce discussion dinner is held in London on 23rd February.
Great post from Saul Klein about just how many people made LOVEFiLM a success.
http://blog.indexventures.com/success-has-many-fathers-failure-is-an-orphan/
Monday August 2nd 2010 ………….Determining Valuation for Early and Latter Development-Stage Biotechnology Companies .All biotech entrepreneurs at some point must address the question how much is your company worth? The answer determines the slice of equity for yourself employees and current and future shareholders. As a result most BioEntrepreneurs tend to overvalue their company at the start-up and early development stages. However overvaluing your company is counterproductive and detrimental to attracting institutional and venture capital during these critical stages. Although there are standard valuation methods for determining the value of growing companies with product revenue how do start-up and preclinical stage biotechnology companies without product revenue value their organization?.For valuation purposes biotechnology companies should be divided into two groups Early Development and Latter Development Stage Companies. Early Development Stage companies are Seed Start-up and Preclinical Stage organizations. Latter Development Stage companies are those with an FDA approved IND Investigational New Drug application and companies with a product in human clinical trials. For diagnostic and medical device companies Latter Development Stage refers to companies with products ready for human testing prior to a 510 k or Pre Market Approval PMA application.. When assessing the valuation of Latter Development Stage Companies the following methods are best utilized. Each of these methods can provide differing valuations but the best valuation is an estimate determined by utilizing all three methods..1. Valuation by Comparables Identify similar organizations in similar sectors at similar development stages that have been recently valued by a financing round. Although this is generally not public information there are available venture capital resources for fees you can utilize to obtain this information. Also if you know or have worked with Venture or Institutional Capital they can help you obtain this type of information..2. Valuation by Public and Private Exit Valuations Find the prices paid for mature organizations in your sector during an exit such as an acquisition or an Initial Public Offering IPO .