The Billion $ Startup Club

A lot of people keep asking me to put up a list of 1 Billion $ valuation startups.

I kept it pending for one of those days when I felt really lazy or had nothing interesting to write about.

Today I meet both conditions.

But I will still leave you with what it means to be ‘Worth’ 1 Billion Dollars!

 

A little Calculation

$1 Billion = Rs. 5000 Crores or Rs. 50,00,00,00,000

 

Valuation? 

Is nothing but the notional ‘lifetime value‘ of your startup, that the market/investors arrives at, based on various methods, at a particular time.

So the Valuation of a startup means ‘What is a startup worth?’

Basically if a company has $1 Billion valuation then it means that over the life of the company (based on present realities), investors and markets expect the company to generate $1 Billion of money for all its investors/shareholders in total. 

This theory fails in overheated or skewed public markets as there is a fair amount of speculation which pushes/pulls share prices and hence valuations are based on market sentiments and the need to make short term profits among other variables.

What does $1 Billion Valuation look like?

+

+

+

+

+

= $1 Billion in Collective Valuation

 

Below is a list of Startups which are worth a Billion Dollars (more or less, since relevant real time valuations are hard to come by) … and what they do. 

I have not added the usual suspects… Facebook, Twitter, Groupon, Linkedin etc. I think it is time we stopped thinking of them as ‘Startups’.

[Note -Business Valuation is considered by many as more art than science. This is especially true for Pvt. Ltd companies. For startups, despite what anyone might tell you, no rule of thumb exists and definitely no formulas. If valuations were art on canvas then startup valuations are most definitely done by Salvador Dali.]

 

Yelp is a user generated local reviews website which is hitting the market with its IPO in march with a $100 Million offering giving it a $778 Million Valuation. The site boasts more than 22 million reviews, 61 million monthly unique visitors and 529,000 business pages. The site has helped many small businesses gain traction online, but Yelp largely makes it money by selling ads to these local businesses.

 

AirBnb is an online service that offers people seeking rooms, lodging, vacation rentals and other short-term accommodations and matches it with rooms on rent, owned by people who generally aren’t professional hoteliers. The business really took off during the recession, as people started looking at renting out rooms in their homes, for extra income and travellers shopped for inexpensive accommodation. With 110,000 unique listings available in more than 13,000 cities and 181 countries, Airbnb offers the widest variety of unique spaces for everyone, at any price point around the globe. A great disrupter of the hotel industry, this one is poised to become a multi-billion dollar startup soon.

 

The guys who really popularized the concept of ‘checking-in’ and hence interacting with the environment using your smart phone. Facebook has since followed suit and this has led to considerable competition. It uses gamification heavily, by rewarding users with badges and mayorships for checking in at certain places. Places which partner with Foursquare offer users special offers and discounts. On June 24, 2011 foursquare raised $50 million on a $600 million valuation.

 

ZocDoc offers a convenient, free way to find a doctor and book an appointment instantly online. ZocDoc’s mission is to improve access to healthcare. The service currently offers patients the ability to book appointments with doctors and medical specialist in the US. Its website is attracting doctor-seeking browsers at the rate of 800,000 a month. The company has raised $95 million and has been invested in by some of the biggest names in the VC industry.

 

Spotify offers streaming music from major and independent record labels including Sony, EMI, Warner Music Group, and Universal. Users download Spotify and then log onto their service enabling the on-demand streaming of music. Its deal with Facebook has helped this Swedish startup take the music world by storm. Facebook integration is now compulsory for new accounts. Users can register either for free accounts supported by visual and radio-style advertising or for paid subscriptions without ads. It now has about 2 million subscribers and 10 million users and makes an estimated $100 Million +.

 

Storm 8 is the creator of role-playing games on iPhone, iPod Touch and Android. The company has more than four million daily active users and those 200 million downloads have are on over 58 million unique devices. It boasts of a number of top mobile game titles and one of the highest valuations in its segment. But what impressed me most was the fact that until recently THEY HAD NEVER RAISED ANY EXTERNAL FUNDING. It is now looking at raising $300 Million.

 

Square  is a startup service that enables anyone to accept credit cards anywhere. Square offers an easy to use, free credit card reader that plugs into a phone or iPad. It is on track to process $2 billion worth of transactions on an annual basis and regularly records over $ 10 Million of transactions over weekends. It now has over 8,00,000 merchants who use its service.

 

Gilt Group is a privately held company dedicated to providing its members with access to coveted fashion and luxury lifestyle brands at sample sale prices. Each Gilt Groupe Shopping Event is designer-specific and held over a one day period. The production team creates a short video reel to introduce each designer and brand to its membership. Membership is by invitation only. With revenues of $500 Million and a reach of over 90 countries, this is one of those startups which is bordering on becoming a behemoth. 

 

Dropbox is one of the super-startups of the Cloud Storage market. A simple, easy to use application for individuals like you and me, who want to have a folder which they can share with anyone, anywhere and at anytime. Used extensively in colleges, communities for sharing, editing and creating content with the simplicity of drag and drop function into the folder of your choice. Though valued at around $1 Billion many respected sources have speculated that the true valuation could be around the $5 – $10 Billion mark. It is estimated to have hit $240 Million in revenues in 2011.

 

Similar to Dropbox but meant for large organizations and companies. Box.net defines itself as a cloud storage and collaboration solution for enterprises. Just like Dropbox, it is based on a freemium model. Though it recently turned down an offer for acquisition which valued the company at $550 Million, most people feel that $1 Billion is a better estimate of what they are worth. Box.net currently has 6 million users and some 60,000 businesses employ its cloud-storage software, including 73 percent of Fortune 500 companies. To give you an idea of their ambitions, Box.net has openly been challenging Microsoft for domination of the Cloud Storage Market with a number of high profile deals.

 

Rovio is the company which made Angry Birds, also known as, the only reason why most would use a tablet.  Apart from the fact that it is one of the most paid for games on mobile app stores, it has had more than 500 million downloads till date, is now part of a Hollywood Script, has seen partnerships with Samsung and just turned down an offer from Zynga for $2. 5 Billion. That’s a lot of numbers for a company that makes games about birds with anger issues and green pigs who like eggs.

 

India’s most successful eCommerce startup. Though rumours of it being valued at $1 Billion have surfaced from time to time, most people agree that it still has a few more months of explosive growth to get there. Though by factoring in PPP (Purchasing Power Parity) it probably has hit the $1 Billion mark.

I don’t think I need to say more.

Klarna is one of Europe’s leading providers of payment solutions for e-commerce. It lets people pay for stuff they have bought online after receiving it from merchants and helps create a much more trustworthy environment for transactions. It already has 600 employees and clears $2.5 billion worth of payments from 6 million consumers across 14,000 merchants and has recently raise $115 Million in its pre-IPO round.