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Comment by nl | Hacker News Reader

They raised $200M at a $1B valuation, so sold 20% of the company to the investors.

"The company, currently profitable, generated €602 million ($710 million) in revenue last year, up 38% year over year, the sources said."

Why on earth would they accept a valuation that was less than 1.5x revenue? Service companies get a better valuation than that!

The article says they are profitable, so presumably not about to run out of cash.

Something very strange is going on with this deal.

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Well, the profit could be $1 if you're "profitable" which would warrant a bad valuation (like if you just resell SMSes with no value add at all). But another commentor quoted an 18% margin so if that's true it seems weird. Why raise $200M by equity if you make around $150M in profit. It can't be the whole story..

They were apparently Twilio before Twilio and yet given the clear example of Twilio doing what they do better and years of opportunity to catch up they have failed to do so. A company with a known growth trajectory that will be at best #2 in its market can’t command the same kind of multiples as one that still has potential as opposed to a track record, or one that has a much better track record.

This is absolutely true. But this multiplier is lower than many acquihires!

It's EU, Bizzaro-World for startups and business.

Sure, but capital isn't geographically limited. I live a lot further away from the US than Croatia and I have multiple friends here who've raised from the US.

Something smells wrong here.

Agreed

There's a level of nationalism and nativism among investors.

If you're not in SF and in IT - you're probably not getting much.

1. Its a private equity raise not a VC round. This usually comes with secondary stock sale for liquidity to founding team .

2. The multiple is low due to low gross margins which is in the early twenties to mid twenties.

1. Sure, but this shouldn't affect the multiplier

2. Sure, but low margins don't mean this low multipliers if they can scale (which they can). Amazon is a low margin business!

Maybe they are ok with 200mil$

Then why the low valuation!?

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