The leading story in technology-land this morning is the multi-billion dollar exit of Deliverr, a San Francisco, California-based e-commerce fulfillment startup, to e-commerce giant Shopify.
At first blush, the deal looks like a clear win. What startup wouldn’t want to exit for billions to a company growing as quickly as Shopify? But when we compare Deliverr’s exit price of $2.1 billion against its $2.05 billion final private price set early last year (Crunchbase data), the deal gets a bit more tricky to parse.
After all, no company wants to exit for a flat price, as it implies its most recent investors put their money to work for a period of time for no returns. Given the time-value of money, or the time-cost in this case, locking up funds at a time when interest rates and inflation are both rising for zero upside is actually a loss.
However, late-stage deals are nuanced in ways that we cannot grok just from the topline numbers. Perhaps Deliverr’s last round back in 2021 included provisions that ensured its most recent investors would receive a set minimum return in the event of a sale.
If so, the deal could squeeze earlier investors and minor shareholders, like employees, out of some of the value of their stock. If the deal had more fat on the bone, we wouldn’t need to speculate about late-stage terms and their possible impact.