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05-02-2013, 11:23 PM #1
It wouldn't make sense for Google corporate to buy a stake in On Deck Capital ("ODC"), hence they have a direct arm called Google Ventures specifically for certain types of investments. It's still Google.
The logic reads like this:
Wonga offered $250 million for ODC
1. ODC got a realistic market valuation of their business
2. ODC believed they were grossly undervalued by Wonga
3. ODC learned the market needed more convincing that they are or will be worth more than $1 billion in a sale
4. ODC knows that in order to maximize the valuation and success of a future IPO, they need a few highly respected investors to "get in early" on them to pique the market's interest.
5. Enter Google Ventures and Peter Thiel. The $17 million figure is meaningless but both will have a seat at the boardroom table. And let's not forget Sandy Miller who got a board seat 3 months ago. Forbes ranks him as one of top 100 VCs in the world. (http://www.ivp.com/team/general-partners/sandy-miller). I assume everyone knows who Peter Thiel is.
6. These names legitimize ODC and automatically increase their market valuation for a buyout or IPO.
7. ODC was legitimized from a debt perspective by Goldman Sachs and is now made whole by incredible legitimacy on the equity side.
8. ODC goes on to laugh at the recent $250 million offer they got.
9. Countdown to sale or IPO begins.Last edited by Sean Cash; 05-02-2013 at 11:36 PM.