PriceMinister: a beautiful startup story and a great exit

Last Wednesday, PriceMinister, one of the companies in my portfolio announced its sale to Rakuten, the $3bn retail giant that has Amazon and eBay taking notice after its second major e-commerce acquisition in the "West", following last month.  At €200M it's a super exit, but it's also a great tale of entrepreneurship.

First a few words on the deal:

  • Speed to exit: €200M in consideration for a company created in 2001 that went through two downturns, not bad IMO.  Numbers floated include €40M in net revenues and €7M EBIT in 2009.  With the strong operating leverage kicking, the acquiror paid a reasonable EBIT multiple in line with a promising and growing marketplace.  The site also boasts 12M monthly uniques and a very strong "standalone" brand for an e-commerce property.
  • Capital efficiency: all-in the company raised under $15M (though that excludes dilution through acquisitions) making it highly cash efficient, thanks in no small part to the work of a thrifty CTO and a smart viral marketer.
  • Continuous struggle to access cash: Initial funding came from friends and family (and then some) and then from Technocap (2001),  more friends and family (2003) and finally 3i and Quilvest (2005).  Is it that companies that have been through the testing times of capital constraints just become so much better r?
  • AV in the deal: Atlas came in through an acquisition / merger with our listings company Mixad (2007) which I negotiated and pushed through with Pierre and Jean-David at 3i with the founder of Mixad.  By the time of the exit and post the sale of the 3i shares, AV was the largest institutional shareholder.

What's nice about this one:

  • Case study in teamwork: Same team of founders, since the outset: Pierre Kosciusko-Morizet (primus inter pari), Pierre Krings (ops), Olivier Mathiot (marketing), Justin Ziegler (tech) stuck together and got better together, managed each other hard but well and kept it real.  The third original founder was Nathalie Gaveau, who led the commercial efforts for the first few years and left when her family moved to Asia.  The beauty of a cohesive and strong initial team.  Maybe it's the unique values of rugby that have filtered through here.  Maybe the French "laughing stock of the world" football team would do well to get trained by these guys.
  • High management ownership: by being capital efficient, borrowing when necessary and taking calculated risks, these founders kept their ownership high and reaped greater rewards.
  • Continuity and upside: Rakuten views this team as an asset they want to nurture and enable, as a growth platform.  They were very smart in engaging the team and investors in the right way and building a long-term project together with management.  Net-net this may be an exit for me (in what is a very clean deal) but it's a new and improved project for the entrepreneurs.  Nice.  Interview on Eco89 in French here.

Thank you's:

  • Some teams just execute.  A big thank you to Pierre & Pierre, Olivier, Justin and CFO Philippe Favrot and all at PM who made this happen.  I would be lying if I told I added much value on this one besides being a not too painful board member; this was a tight and well-managed company that reacted fast to changes in market conditions and any hint of underperformance.
  • Jean-David Chamboredon ex 3i.  For my money, best venture investor in France (and beyond).  Voila, I said it !  JDC as he is know has now launched a seed fund in France, ISAI.

And now my friends, Rakuten Ichiba !  Let's watch these guys "create a global platform where consumers can enjoy shopping no matter where they are located, and to help merchants grow their online business".

<– Pierre, Olivier, Pierre, Justin

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