Google buys New Zealander's social media marketing company for $US250m
"Brilliant result for Ms Ransom and friends."
Featured commentGoogle has bought Wildfire Interactive, the social media marketing company founded and run by ex-pat Victoria Ransom.
The Wall Street Journal said this morning that people close to the deal put the price at $US250 million.
The San Francisco-based Ms Ransom was born and raised in New Zealand. She earned an MBA from Harvard Business School and co-founded an adventure travel business before starting Wildfire four years ago.
Her ownership stake in Wildfire was not immediately clear. The company has received funding from Facebook, according to US media reports. Wildfire's website lists six venture capital investors.
A Facebook spokesman refused to comment to the Journal on the implications of Google – which is pushing its Plus service as a Facebook rival – buying Wildfire.
Google will add Wildfire to its existing stable of ad-serving properties, which includes DoubleClick.
The search engine giant has been looking to buy its way iinto the social media ad buiness, the Journal's AllThingsD blog reports.
According to a Crunchbase profile, Wildfire has raised $US14 million in startup funding since being founded in 2008.
It has 16,000 customers worldwide, including corporate and agency clients who include Facebook, Ogilvy, Amazon, Sony, Pepsi and Target. Wildfire helps the companies market their brands on social media services such as Facebook, Twitter, LinkedIn, Pinterest and Google+.
In a September 2011 interview on Campbell Live, the Manawatu-raised Ms Ransom (then 35) said Wildfire became profitable in its first year, and had grown from seven to 170 employees with a 2012 hiring target of 400.
Facebook offered $200m?
Ex-pat Derek Handley, who had his own big score when The Hyperfactory was sold to US media giant Meredith iin 2010, was quick to relay congratulations – and a Facebook rumour.
"Huge congratulations to Victoria and her team it's an amazing achievement and again shows how fast companies can be built to achieve incredible value in such a short period of time," Mr Handley told NBR ONLINE.
"There was a rumour a few months ago that it would be sold to Facebook – one of Wildfire's very original funders – for about $US200 million," The Hyperfactory co-founder noted.
"For the foreseeable future – five, maybe 10, years – any companies that operate and succeed at the intersection of social, mobile and brand marketing are set up for big things."
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Comments and questions34
Brilliant result for Ms Ransom and friends
What a great shame she had to base herself overseas to achieve what she has achieved. She would have had no show raising USD14M capital for a start up in the NZ market.
Hopefully the changing of the guard at the NZ Angel Association will have the grunt to help future successes like this - here in NZ
Raising that level of money in NZ is not impossible, just very very very unlikely and the cost of doing so probably makes it not worth the effort - time taken and level of equity sold.
I would not hold your breath on the new guard at the Angel Association, it seems to me to be a case of whose turn it is to hold the top job. no new blood. The Angel market and VC market having had a big capital injection from the taxpayer (NZVIF) is slowly dying.
If you want to see a change then there needs to be a change in the management of NZ Venture Investment Fund and much better use of taxpayer capital.
whats the difference between very very very unlikely and impossible???
Lets be honest, even if you did you cannot be based here when all your clients are there
the difference is that there are a few companies that have raised that level of money so it is not impossible.
I would agree with you that to build a business having key people in market is critical, does not mean you cannot have some people in NZ.
If you want to get an exit like the one above you probably need the senior management team in the key market - where the buyer is based.
These talented Kiwi's are not 'fund' raiserers and as long as they're loved overseas thats were the talent go's ..... pure and simple
With all the support Xero gets on NBR comments and other media it is no surprise she went overseas.
Good on her. Wonder what her next biz will be.
Xero's a great company with a smart leader - but also a public company with a sky-high valuation. That's a situation that merits debate.
Ransom has done brilliantly. Being one of the first-movers in social media marketing helped, but so did being on Facebook, Google, Twitter and VCs' doorsteps. Don't think she could have done it from NZ.
Some New Zealanders will always head offshore to seek business success. Good on them. Most either return at some point, or otherwise lend a hand to the local scene with investment, advice or mentoring. Personally, I wouldn't have it any other way.
In terms of Ransom's next business, I imagine she will still at Wildfire. She seems to have been so central to the company that it's hard to imagine Google not including a clause for her to stay on as CEO.
Agree debate is healthy. But many in NZ dont understand how Tech companies are different to utilities and farms. As such, they are not willing to fund high growth companies as they think the valuations are "sky-high".
No doubt she will stay on for a while but she has had a big pay day and being a salaried person (ie. fixed while the big gains go to the owner), under the control of someone else does not normally suit the entrepreneur. I would give her 12-18 months there while she thinks up her next business.
With revenue below $35m but a market value above $500m, Xero has rich value by any conventional metric. As has been noted by various NBR articles, some investors see a lot more growth ahead, or the prospect of acquisition - either way, there seems no shortage of willing investors as the company's shares go up and up.
It would be good to see NZ have a more active angel and VC scene. Right now, the government is easily the most active player helping to bankroll techs such as Xero ($4m), NextWindow ($6m), Endace ($10m+) and dozens more with direct grants.
But at the end of the day it's just maths. A country with a small population will always have limited start-up funds compared to the money sloshing through Silicon Valley and other hotspots (and in a world of commoditised technology and communication, you can't beat good old geographic proximity to your customers to give you an edge).
Same goes for the local sharemarket.
Hence we see Xero looking to dual-list on the ASX. Sensible move.
Chris, I assume when you say the government is the most active investor and the amounts you mention - you are refering to Ministry of Science and Innovation. Agree that through MSI the government is the most active "investor" in terms of the number of companies it is backing. In terms of $s MSI is actually a very small contributor to comapnies overall funding.
In terms of angel and VC market you should ask yourself why the NZ market is as poor as it is. I accept that there are issues with the general financial market but there are specific factors around the poor (in my opinion) performance of the NZ Venture Investment Fund and its related angel groups.
The portfolio has preformed poorly in absolute terms (-20%) and in relative terms to other VC funds globally. in 2008 they set out to attratc 1,000 angel investors, currently have 300 and now talking about needing to find more investors. Only two active funds at present after having no new funds for 4 - 6 years. NZVIF has failed to hit any of the targets they set when established in 2001, and have failed in most of the revised targets.
without a successful VC market then NZ start-ups will struggle more than necessary.
Box has just raised over $100m based on a $1.2B valuation - what are its revenues? competitors include Google and Apple
Square has just raise $200m based on a $3.2B valuation - what are its revenues? Competitors include visa/mastercard and Paypal.
Rich by conventional metrics but not unheard of.
Harvey you have hit the nail on the head.
People need to get off Xero's back.
What does "Wildfire" actually do? I've never heard of it before.
Wildfire Interactive is a software platform that allows companies to brand themselves via social media. So it's a one stop shop for all your social media needs. Check us out at www.wildfireinteractive.com
*** Www.wildfireapp.com
Is the comment below serious? Have you even travelled to America?
"What a great shame she had to base herself overseas to achieve what she has achieved. She would have had no show raising USD14M capital for a start up in the NZ market."
Take off your rose coloured glasses. How the hell would a NZ company service Fortune 500 companies from the bottom of the world?
If you've done business in America you'll know you need to be in their face in their timezone, and in their culture.
This is a really inspirational sale because I use wildfire and can tell you it is at best average software. Just goes to show what happens when you are first off the mark and know all the right people.
There is local software that does a better job for 1/5 of the price.
If we all agreed with your view we should provide free one way air tickets for all our smart people to emigrate and expand their horizons overseas.
Surely we can have companies based here in NZ but have a strong sales and marketing presence in countries like the USA??
Orion, Software of Excellence, Xero all have their development shops here, but, very heavy prescence in the USA on the ground. I think if you are more service oriented and alot of client contact there is no other option but to be on the ground and avaiable for them - customer is always right...
What is the name of the local company?
whoop whoop
The NZ capital crunch is not about the leadership of the Angel Association or NZVIF. The AA is a trade association of investors. It's aims are to bring more investors into the asset class and to upskill investors. In this mission the AA has been and is successful. NZVIF provides matching funds, in the form of attractive loans, to approved investment partners, e.g, funds, who invest directly in early stage companies.
Neither the AA or VIF can make more money magically appear. In case you haven't noticed, (1) NZ is a small economy with still-developing capital markets, and (2) the entire PE, VC, and angel markets worldwide are still in various stages of collapse-reeling-recovery from the GFC. The issues are systemic and global in addition to being local.
Inventors and entrepreneurs will continue to do smart things - to go where capital and customers are located in order to grow their businesses.
In the example given, a company needing $14M USD of seed or early-stage capital, yes, this is likely too big a pig for the NZ snake to swallow. Most NZ funds are simply too small to make this investment without compromising their diversification goals. This is in stark contrast to a silicon-valley fund with multiple $billions to deploy.
While NZ capital markets have gone a long way in syndication and global partnering, there is still progress to be made. I am confident the industry will continue to gain strength.
NZVIF's objectives were a lot wider than just dishing out money. They had a mandate to create an industry etc. they set their own targets and have failed to meet those. If you invested in a company where the CEO set their objectives (over 10 years) and continually missed targets you would either change the CEO or stop investing.
The financial market crises is an issue but it is for all other VC and angel investors globally, and NZ has underperformed those groups.
The new Chairman of the Angel Association has said they are losing investors and need to grow from 300 to 1,000. This was the same target in 2008 - so since 2008 nothing has changed in 4 years. How is that successful?
Angel investors and VCs demand performance from their investees why should the NZ taxpayer (who funds NZVIF etc) not ask for the same in return. Note my understand NZVIF part funds the Angel Association so again the taxpayer has a right to question value for money.
Dear Anonymous,
I appreciate the points you're making. I'm not trying to make excuses for anyone, but I have to attribute most of the problematic industry issues, both angel and PE/VC to badly damaged capital markets due to the GFC, coupled with shallow and still developing capital markets here in NZ. Even before the GFC, NZ capital markets were adolescent, at best.
The AA goal of 1000 investors, and I speak from having been on the Council of the AA, was in the category of a BHAG, and was set prior to the GFC that blindsided nearly everyone. So missing that goal is not surprising, and I would not say due to incompetence or lack of interest on the part of the angel community or the Association.
As for the metrics on NZVIF, it should be understood that in developing an entire industry and infrastructure, the time horizon for judging success should be a very long term one, in my opinon.
The main reasons these groups can not grow their membership from my experience are (1) they refuse to be transparent about their historic performance and (2) they actually appear not to see the better deals in the market.
In terms of the time taken to build an industry point taken, but in 10 years surely there would be some visible progress and from my point of view there is little. Go back and look at some of NZVIF own data on the state of the market.
The problem historically with the Angel Association and its member groups like Icehouse and Powerhouse is that they are like a closed club which does not entice new members to invest. They also totally treat the companies presenting for investment like shite.
So many of the good companies requiring capital don't bother going anywhere near them.
Agree
Roger, can you email me chris@chriskeall.com? Thanks
There's also the issue of having lame-duck directors that often come with local funding !! I think you'll find the off-shore move was a mix of competence and money !!
I made a sh*tload out of xero so I can't complain but do like comparisons...
xero trailing rev march 12 - $19.3m (up 103% YoY)
Market cap $560m
Mkt cap / revenue = 29x
Never profitable
Wildlife - Dec 11 revenues - US$35m -US$45m (lets say US$40m) up ~300% YoY
Acquired for US$250m
Control premium mkt cap / revenue = 6.25
Lets remove the control premium - mkt cap / rev = 4.8x
Profitable in its first year
Google - 5.5x revenue multiple
Salesforce.com - 7.57x revenue multiple
I could go on and on - I even did a Bloomberg compco for 'hot SAAS' companies - surprise surprise they were all 3-5x rev multiples with the exception of Netsuite at 15x rev. And they WERE ALL PROFITABLE.
Xero is now about 3 x more expensive than facebook on a revenue multiple basis (despite similar revenue growth profiles and facebook having the better brand).
I think it all boils down to NZers ignorance really. The amount of times I have heard people talking about xero being a billion dollar stock without ever considering the fundamentals staggers me. Still, its consistent for a nation that believes property won't pop when it has popped everywhere else around the world.
Oh by the way, I like xero, i use it for my trust accounting - just wouldnt invest at these prices... (if people can't see the distortive impact of valar and nzvif buying millions of dollars of shares on market. they really shouldnt be investing).
Best 'negative' post I have seen.
What 'hot SAAS' companies did you compare to? Did you look at Box, Dropbox, Square? Last time I looked, valuations at about 15-20x current annualised revenue was normal. Xero's annualised is $34.5 so valuation is about 16x.
The key with Xero and other similar is can they continue to grow at current rates?
Even dropbox is on a ~16x trailing revenue multiple. And it should be fair to say that dropbox is the hottest of the hot right now so should be at the peak of multiples. Anything valued over 15x trailing revenue without bloody good reason, is overvalued. Especially when you have not been able to demonstrate that your platform is profitable.
Sure you could use annualised revenue as a metric but not everyone reports that. So its not a comparable metric.
Xero is not a slamdunk, it could fail badly in the US. There is no way it should be the hottest company in the world right now by valuation metrics.
WHAT A LEGEND - IS SHE SINGLE :)
YOU NEED TO ASK HER WHETHR SHE WOULD WANT TO LIVE AND RUN A BIZ FROM NZ - MOST LIKELY THAT ANSWER WOULD BE NO!
LIKE THE 750,000 KIWIS LIVING IN OZZ THEY LOVE ALL THINGS NEW ZEALAND EXCEPT FOR THE LOCALS
Congratulations Wildfire and Victoria,
We've have used Wildfire, services were great
nice work
@mango - she is now deaf - typing in caps equals shouting, so please dont.
Google has nothing to worry about as Outlook.com really sucks