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.