© Equity Fingerprint 2006
27 September 2006
SKYPE – a case study.
All information from searching on Google and
estimates
Copyright Equity Fingerprint, 2006
The beginnings…
• Skype was started in 2002 by the founders
of Kazaa:
– Nikalas Zennstrom (37 yrs)
– James Friis (27 yrs)
Copyright Equity Fingerprint, 2006
The beginnings…
• Kazaa was founded in 2000:
A file sharing program.
• 315 million downloads
“most downloaded program in the
world in 2003”
• Had problems with music industry due to
piracy.
• Global free market for music, video and
p***n.
Copyright Equity Fingerprint, 2006
Skype Funding
• 2002
$2M
3 Angels + Tom Draper
Angel round
Draper Investment Co. (VC)
• 2004
$18M
Draper Fisher Jurvetson
VC round
Bessemer Venture Partners
Index Ventures
Mangrove Capital Partners
All VCs
Copyright Equity Fingerprint, 2006
Milestones and Product
• Easy install
• Easy use (5 minutes after installation)
• No firewall issues
• Reliable connection
• “Worked 100x better than anything else
we had seen” – Rob Stavis of Bessemer.
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Money
• Charging for
– Voicemail
– Connection to a landline
– Reselling arrangement with ISPs
Multibillion $$ potential
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Making the EF - Data
• The Economist – “Giving Ideas Wings”
16 th September, 2006
“The earliest investors (i.e. from angel round) saw a huge
return, 350 times or so, on their estimated $2 M
investment.”
• VC’s return 40x on 18 M investment.
(Estimate - PSB)
• Skype sold to
for $2.6 bn
– $1.3 bn in shares + $1.3 bn in cash (+ $1.5 bn earn out)
Copyright Equity Fingerprint, 2006
Making the EF
• Final equity:
Buy-out value
$2,600 M
Less:
Angels ($2 M x 350)$700 M
VCs ($18 M x 40) $720 M
.
So:
Founders + team $1,180 M
Approx.
Copyright Equity Fingerprint, 2006
Equity split
initial
After angel
round
At buy-out
100 %
100 %
100 %
$2,600
TOTAL
28 %
$720
VCs
27 %
$700
Angels
45 %
$1,180
Founders
+ team
Percentage ownership
Control
o