Here’s who won big in Fitbit’s ‘super dragon’ IPO

June 18, 2015

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In the world of venture capital mythology, there are unicorns — startups valued at $1 billion or more — and dragons — those whose exit covers the entire fund for firms that backed them.

Fitbit’s IPO lines it up to go those Sand Hill Road creatures one better — the “super dragon.”

That’s because the Fitbit stake of Foundry Group, the San Francisco company’s biggest shareholder, is now worth more than $1.5 billion, based on Thursday’s first-day trading.

The fund that Foundry’s original 2010 investment came from totaled around $240 million. So that would make this exit potentially six times the size of its fund — hence a super dragon.

Foundry isn’t alone in getting an outsized return on Fitbit, either, at its current valuation of around $6 billion. There was only about $80 million invested in the company since it was founded in 2007.

Investment research firm Equity Zen figures that Foundry paid about 22 cents a share for shares it got in Fitbit’s Series B round, good for a return of about 122X at Thursday’s closing price of $29.68 a share .

The founders — CEO James Park and Eric Friedman — started the company with $425,000 from friends and family who Equity Zen say got in at 4 cents a share. That figures to nearly a 750X return on investment for those lucky insiders who held onto their shares.

The founders each retained about a 10 percent stake in their baby. That means their Fitbit stock is now worth nearly $600 million each.

Park told Fox Business Network after ringing the bell at trhe New York Stock Exchange that “at the end of the day most of it will probably be given away.”

“I haven’t really thought about it, but it’s overall a pretty exciting experience,” he said. “I have a lot of gratitude for everyone at Fitbit who’s been with us on this journey, and our employees, our investors, and our customers. It’s really very exciting.”

Other big winners include True Ventures and Softbank Capital — who were respectively represented on Fitbit’s board by Jon Callaghan and Steven Murray.

Equity Zen pegged the price that True Ventures paid for its Series A shares at 9 cents — about a 330X return — and its Series C investment at 33 cents — a 90X return. Its stake is now worth more than $1.2 billion.

Softbank got in for $1.48 a share in Fitbit’s Series D round — good for a 20-fold return. Its stake is now worth more than $300 million.

And there are plenty of doubters out there who believe that Fitbit has a tough road ahead, competing with the Apple Watch and a host of others jumping into the fitness wearable market that it now leads.

Perhaps the biggest worry is that the popularity of fitness trackers could prove transitory. Fitbit said in its prospectus that 19 million people had registered its devices, but there were only about 9.5 million active users.

That’s a lot of people trying the product out and deciding it isn’t for them.

 

FROM: bizjournals.com