Why? Because the term sheets were signed weeks ago. The deal was only announced this week. (Yes, sorry, there isn’t a more interesting reason.)
However, Scott Raney, a partner at Redpoint Ventures, the firm that led the deal, suspects the valuation would have almost certainly gone up in this TCTV interview. (He didn’t comment on the previously reported $250 million valuation number.)
To be fair, I’ve heard arguments both ways. One the one hand, the $1 billion price that Facebook paid for Instagram might set a benchmark price for other mobile social networking apps. It might compel a competing consumer Internet company (ideally with more than $1 billion at its disposal) to go in with a splashy mobile acquisition too. On the other hand, Facebook’s deal may take it out of the market as a prospective buyer, leaving fewer players to bid up the prices on remaining properties. This is all totally ungrounded speculation though. We’ll see what happens when or if Path ever comes back to the funding table again!
Raney also talks a little bit about how the firm managed to get into the deal. A longstanding relationship with Path chief executive Dave Morin really helped, especially after Morin saw how the firm handled the sale of SimpleGeo, a location services company that was acquired by Urban Airship. Unfortunately, he doesn’t dive into the nitty-gritty details of how the deal went down, except to say that it was very competitive.
While Raney doesn’t confirm or share the valuation, he doesn’t feel that Path is too richly valued. Just to compare (even though I know that valuing companies on a per-user basis is extremely flawed, especially in a high-growth space), Instagram had a little over 30 million users at the time of its sale.
The $1 billion price tag suggests that Facebook paid approximately $33 per user. Path, in contrast, has about 3 million users. If the reported (though not confirmed) $250 million post-money valuation is true, that puts Path at a very rich $80 per user. Also keep in mind that both companies are essentially pre-revenue, although Path sells some filters.
Raney says Path has a very strong team and that Morin is clearly in it for the long haul.