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| How badly fares Austin Ventures' investment in Garden.com Inc.? What valuation judgments did this lead investor, whose board representative is a Business 2.0 "Best VC" (laugh), exercise along the way? | |||||||||||||||
| Fund IV (1994 -
$115.0M) invested $2,722,660 and as of 6/3/00 held 1,429,623 shares of
common stock ($2,777,025 cost) plus Warrants to purchase an additional
22,988 shares of common stock ($48 cost).
The fund has realized $17,076 in
proceeds from sales, redemptions, dividends, interest and directors'
fees. Pre-IPO, this
lead investor had valued the $2,777,073 total cost of its holdings,
including warrants, at $10,336,252. The company (Nasdaq/GDEN) went public on 9/16/99, offering 4.1 million shares at $12 apiece. Underwritten by Hambrecht & Quist, Robertson Stephens and Thomas Weisel Partners, the initial public offering left 16.9 million shares outstanding. Two weeks later, despite factoring a 30% discount to the public stock price, Austin Ventures valued its investment at $19,160,624. One Quarter later, this had depreciated by $10,362,000, but the firm still thought using the price of the last financing that the company was worth $51,500,000. At a 10% discount to the $0.4375 closing price on 10/12/00, Austin Ventures' holdings now value at . . . you do the math. |
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| Though in an operating public company meeting or exceeding significant performance milestones and "seeded" at pre-hysteria valuations, Austin Ventures' investment in Garden.com is worth less than when it was a first-round venture capital financing! | |||||||||||||||
| See also: | |||||||||||||||
| John D. (Bud) Thornton, Spinmeister? | |||||||||||||||
| Epilogue: | |||||||||||||||
| Garden has shut down | |||||||||||||||
| observe@InsiderVC.com | |||||||||||||||
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