Private Company Valuations: A123 Systems, Inc.

Posted By Justin Byers, Lead Business Intelligence Analyst on August 14, 2008

A123 Systems, Inc. has been in the press lately concerning their filing for an IPO. Based out of Watertown, Massachusetts, the company was founded in 2005 and is backed by some of the better venture firms in the industry. With its proprietary nanotechnology, the company has become a world leader in the development and supply of high-power lithium ion batteries.

The VC Experts analyst team has reviewed some of their latest regulatory filings leading up to this event. The team’s findings are below for the most recent Series E round and it is yet another example of a venture-backed company with a post-money valuation of over a billion dollars.

Cost of Capital Benchmark

We plugged in the details of each round into our Cost of Capital Benchmark tool, and as you can see, this has been fairly “investor friendly” capital.

Keep in mind, the lower you are on the chart, the more company-friendly the money, the higher you go on the chart, the more investor-friendly the money. If you are a company raising money, you want be lower on the chart. This is a time when it is not best to be on top if you are the company raising money.

• On January 30, 2006, the company filed its “Fifth Amended and Restated Certificate of Incorporation”. The results of this filing were:

  • Authorized the company to issue 45,000,000 shares of Common Stock

  • A fifth series of “Preferred Stock” was created and designated as
    “Series C Preferred Stock” and consisted of
    8,899,395 authorized shares.

  • Some of the investors in this round included Sequoia Capital, Qualcomm Ventures, Northbridge Venture Partners, Motorola Ventures, Alliance Bernstein L.P., and GE Equity.

  • The deal terms of the “Series C Preferred Stock” were as listed below:

• On January 23, 2007, the company filed its “Sixth Amended and Restated Certificate of Incorporation”. The results of this filing were:

  • Increase in the number of authorized “Common Stock” shares to
    55,000,000

  • A sixth series of preferred stock was created and designated as the
    “Series D Preferred Stock” and it consisted of
    6,096,976 authorized shares.

  • Some of the investors in this round included Sequoia Capital, Qualcomm Ventures, Unicorn Trust, The Procter & Gamble Company, and Motorola Ventures.

  • The deal terms of the
    “Series D Preferred Stock” were as listed below:

• On August 3, 2007, the company filed its “Seventh Amended and Restated Certificate of Incorporation”. The results of this filing were:

  • Increase the number of authorized “Common Stock” shares to
    59,600,000

  • Increased the number of authorized shares of
    “Series D Preferred Stock” to
    10,669,708.

• On May 6, 2008, the company filed its “Eighth Amended and Restated Certificate of Incorporation”. The results of this filing were:

  • Increase the number of authorized “Common Stock” shares to 100,000,000

  • A seventh series of preferred stock was created and designated as
    “Series E Preferred Stock” and it consisted of 5,549,866 shares.

  • Some of the investors in this round included OnPoint Technologies, Alliance Bernstein L.P., Masthead Venture Partners, and GE Equity.

  • The deal terms of this Series E round were as listed below:

• On June 12, 2008, the company filed its “Ninth Amended and Restated Certificate of Incorporation”. The results of this filing were:

  • Increase in the number of authorized shares of
    “Series E Preferred Stock” to
    6,152,554.

Comments

While it's always interesting to see how many, how fast, and at what price rounds go off, it's as useful to see what milestones -- if any -- have been achieved to "justify" the premiums being paid.
By Sam Sternlight on August 14, 2008

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