This acquisition seems to make a lot of sense. Product Hunt is awesome, but it definitely doesn't feel like it's been able to monetize in any meaningful way. The question, of course, is how will Angellist get their $20 mil back?
Please explain why.
I tried to use Product Hunt as a daily driver for product and startup discovery several times but I could never stick with it, found it quite boring. There is so much media out there telling me about new products or startups every day, for what do I need Product Hunt?
Integrating PH to AL could give strong signal to investors, which is especially a big win for investors from syndicates, who may not be as active in their research than bigger investors. Signal processing from PH launches can be automated and give intel to AL investors. PH can be here basically to feed startups for AL users to invest in.
I think an other great addition here would be Betalist. Startups on PH are probably already past seed funding, Betalist would allow AngelList to have a good stream of seeding stage startups, which would allow AL to become a startup pipeline.
We are worth 200M, you are worth 20M, we issue new stocks worth 20M, we buy you for those 20M, now we are worth 220M. It costs us legal fees.
The site is successful, and provides real value to the apps being hunted and the users that discover the apps - but the acquisition price is in acquihire territory.
$20MM is enough to get investors ($7MM invested) off your back and let the acquisition go forward and there is plenty of opportunity for back-end deals where key players have an earn out not represented by the acquisition price.
I'll go out on a limb and suggest it's 40-60X revenue, and even that may be too low (anyone from ProductHunt reading, please correct me, but I doubt it).
0. https://techcrunch.com/2016/05/19/product-hunt-is-ready-to-r...
The sale price to me is baffling, even if it was stock. You're not buying revenue, you're not buying valuable technology IP, and you're sure as hell not buying a world-class team that innovated and built some rocketship product.
So how do you explain it? Maybe the fact that it was bought by one of their investors is a start..
There's also some obvious alignment between the two companies so maybe it was a much larger multiple than I would have expected. The team absolutely managed to build a product that has captured the attention (in many cases daily attention) of the type of people that AngelList wants.
In what way? It has taken investment so it needs to eventually make money. How is going to monetise? Also, there is a limited audience for it so it's growth potential isn't great. Even as someone involved in tech and interested in startups I don't get much use out of it as most of the products aren't interesting or useful.
[1] https://www.crunchbase.com/organization/product-hunt#/entity
Interesting to see the trend chart. At least PH kept their numbers over the past two years.
1: https://www.crunchbase.com/organization/product-hunt#/entity