Talking tech since 2003

Yahoo’s $1.1 billion acquisition of Tumblr will net 26-year-old founder David Karp more than $250 million when the deal closes.  That’s not bad at all.  Tumblr, which raised $125 million in funding since its launch six years ago, is also providing very nice returns for both its investors and Tumblr employees.

An analysis by the research firm PrivCo, which cites financial documents it obtained, shows in detail just how good this deal was for everyone involved.  Union Square Ventures, which was one of the original Tumblr investors will net $253 million from the deal, mostly from a $400,000 seed investment it made in Tumblr in 2007.  The research firm, which provides financial data on privately held companies, estimates Union Square Ventures’ total investment comes in at less than $5 million, meaning the firm will see a return of 5,000%.

Boston-based Spark Capital will net $154 million and Spark partner Bijan Sabet will net an additional $77 million, giving Spark in total a 4,000% return.  Meanwhile, Sequoia Capital, will come away with $176 million, a 700% return on its 2010 investment.

But it’s not just the David Karp and the investors who did well with the acquisition. Tumblr’s employees also did well.  According to the analysis, the company’s first 10 employees will receive an average of $6.2 million in cash; the first 30 will receive an average of $3.3 million in cash, and the rest of the 178 employees will each receive $371,000.

I don’t think you will find anyone complaining about this deal.

What’s great is that the investors will be able to reinvest in new companies, while Tumblr employees may opt to go start new exciting companies.  And of course, David Karp will likely look to put his money to work for him, perhaps even in the form of angel investing.

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