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Why it DOESN’T Suck to Be a VC

Anyone have any ketchup for my plate of crow?

You may recall that I wrote a post on May 13 entitled “Why It Sucks to Be a VC.” I ran some numbers based on the expected price OpenTable’s IPO ($13 per share) and found that the 12.5 million shares held by the VCs would be worth about $162 million. Given that they had collectively invested about $69 million in the online restaurant reservation service, the VCs were looking at a potential return multiple of 2.36.

That was then. Today, OpenTable (Nasdaq: OPEN) priced at $20 per share and rocketed to $31.89 by the end of the day in what Reuters reports as the best first-day performance for a U.S. company in 18 months. As a group, the VCs are now looking at a potential multiple of 5.78x.

Mind you, the VCs won’t be able to sell the stock for at least six months, so all of this is academic. But let’s take a look at how they’d do if, in six months, the stock was trading for $31.89 per share and all the VCs cashed out. The top three VC shareholders are looking pretty darn good:

• Benchmark Capital, which invested an estimated $12.7 million over two rounds (according to data from peHUB publisher Thomson Reuters), holds 5.3 million shares currently worth about $169 million. That gives it a potential multiple of 13.29x. Nice!

• Impact Venture Partners, which invested $12.7 million over two rounds, holds 3.5 million shares presently worth about $112 million for a potential multiple of 8.81x. Also nice!

• And Integral Capital Partners, which invested $9.2 million, holds 1.5 million shares worth an estimated $48 million, for a potential multiple of 5.23x. Pretty good in today’s environment.

Congrats to OpenTable and all of its VCs! And here’s hoping the stock price only goes up from here.

Value of VCs’ Shares After OpenTable IPO
Venture backers Shares held after IPO Est. price per share Est. value of shares Est. VC invested Est. multiple
Benchmark Capital Partners IV LP 5,290,211 $31.89 $168,704,828.79 $12,690,000.00 13.29
Impact Venture Partners 3,503,853 $31.89 $111,737,872.17 $12,690,000.00 8.81
IAC/InterActiveCorp 2,177,550 $31.89 $69,442,069.50 n/a n/a
Integral Capital Partners V LP 1,503,072 $31.89 $47,932,966.08 $9,170,000.00 5.23
Venture Frogs Fund I LLC 74,611 $31.89 $2,379,344.79 $950,000.00 2.50
Windspeed Ventures (1) 51,522 $31.89 $1,643,036.58 $9,170,000.00 n/a
W Capital Partners I LP 155,285 $31.89 $4,952,038.65 n/a n/a
Draper Richards n/a $31.89 n/a $580,000.00 n/a
Total 12,474,686 $31.89 $397,817,736.54 $68,770,000.00 5.78
Sources: SEC filings and Thomson Reuters
(1) Windspeed’s total proceeds could potentially be $1.34M. 
Windspeed is slated to sell 52,000 shares in IPO for estimated proceeds of $676,000.
Compiled by Lawrence Aragon, Venture Capital Journal