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Private Company Valuations: Digital Media (Q1 2008)

Posted by Justin Byers, Lead Business Intelligence Analyst on July 17, 2008

Whether you are an active blogger, YouTube fan, internet radio DJ or avid email user, it's clear that digital media has revolutionized the way we create and consume content. Depending on who you are speaking with, some consider Digital Media its own industry, where others feel that it is more of an "industry application". Either way, Digital Media is receiving more and more attention from VC firms. Below are the findings of some the investments that we analyzed from Q1 2008 for Digital Media companies.

Thumbplay, Inc. based out of New York, provides wireless entertainment services to the media and telecom market. During the most recent round of funding, they raised approximately $18 MM from several sources including New Enterprise Associates, Bain Capital, SOFTBANK Capital Partners, and Cross Creek Capital. The Conventional Convertible Series E shares included cumulative dividends of 4% and a liquidation preference that was Pari Passu with other series preferred. The post-money valuation following this round came out to be $312,530,044.

Radar Networks, Inc. develops semantic web platforms for building Web 2.0 services that in the future will create a new way of sharing and managing online information. They brought in an additional $13 MM in this latest round. Some of the participants of this Series B round were Draper Fisher Jurvetson, Velocity Interactive Group, and Vulcan Capital. These preferred shares were Participating Preferred with a 2X cap on the participation, and they also included non-cumulative dividends at a rate of 8%. The post-money valuation after this round was $32,911,687.

Yardbarker, Inc., a company out of the Silicon Valley region, that runs a website where users submit links to the best sports content from around the web, received total funding of just shy of $6 MM from several firms that included Draper Fisher Jurvetson and Labrador Ventures. The Series B shares were Conventional Convertible and included Weighted Average anti-dilution protection. The team found the post-money valuation to be $18,106,008.

After inputting the data into our Cost of Capital Benchmark tool, we see that Thumbplay, Inc. came out with the most "company-friendly" capital than Radar Networks, Inc. and Yardbarker, Inc.

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.

Cost of Capital Benchmark (What's This?)

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