Why Is Patricof Smiling? Greycroft Sees 6x Return on HuffPo Sale

The biggest winners in AOL’s purchase of Huffington Post for $315 million are Greycroft Partners and Softbank Capital, both of which will walk away with about $75 million, for an estimated return of 6x each, according to data from Thomson Reuters (publisher of this blog).

Alan Patricof, co-founder of Greycroft, confirmed to peHUB that the firm will see a return of about 6x on its investment, but he said investment details from Thomson Reuters (see below) are incorrect. He declined to disclose detailed financial data.

Thomson Reuters reports that Huffington Post, a political news website, pulled in $35 million in venture funding over three rounds: a $5 million Series A valued at $22.84 million from Greycroft and Softbank in 2006; a $5 million Series B valued at $31.6 million from Greycroft, Softbank and the Pilot Group in 2007; and a $25 million Series C valued at $111.4 million from Greycroft, Softbank and Oakstone Venture Partners in 2008.

The exact amount contributed by each investor in each round was not disclosed, so Thomson Reuters estimated the amount by dividing the dollar amount of the round by the number of investors. Based on those estimates, Greycroft and Softbank each own about 24% of HuffPo, while Oakstone owns 7.5% and Pilot owns 5.4 percent.

That works out to a payday of nearly $75 million for both Greycroft and Softbank, $23.6 million for Oakstone and $16.9 million for Pilot.

For Greycroft’s and Softbank’s estimated investments of $12.5 million each, that amounts to a return of about 6x each. For Oakstone, that’s a 2.8x return on its estimated investment of $8.3 million, and for Pilot it is a 10.1x return on its estimated investment of $1.66 million.

Patricof told peHUB: “Your figures are totally incorrect. The only thing I will confirm is that we did make about 6X on our investment.”

Patricof added: “We are very pleased to have been part of the investment group for Huffington Post and that there was such a positive outcome for both the management and investors. The combination of the two companies was totally a creation of the two principals and follows our practice of supporting management in their strategy as to when is the appropriate time to effect a transaction.”