Kelkoo is a great case study. It was one, not to say the, success story of the Internet in France and even in Europe. It was acquired by Yahoo for €475M in 2004. It was extremely ambitious from its foundation and had an amazing pan-European strategy thanks to acquisitions in Spain, the UK and Scandinavia: DondeCom, Shopgenie and ZoomIT. Kelkoo raised more than €45M in less than 12 months! Therefore the founders faced a huge dilution linked to three rounds of financings and these three mergers & acquisitions (“M&As”).

The capitalization table and the figures below show the evolution of the numbers. I am aware that these data are dry, tough to read, but if the reader accepts to follow me, he or she may find them of interest. Let us begin by the last table which describes the financing rounds. In 1999, Kelkoo was founded by five individuals (Chappaz, Lopez, Amouroux, Odin and Mercier) and immediately financed by two venture capitalists (“VCs”): Banexi and Innovacom. The two funds provided €1.5M in December 1999 (A round) and then a little more than €4M in March 2000 (B round). There is an important detail to notice: there was a 1 to 50 stock split between the two rounds; it explains the huge difference in the numbers as well as the fact that the price per share of €24.67 of the A round is equivalent to €0.50 after the split. The price per share of the B round was €1.45. The five founders had shared their stock as 1/3 to Chappaz, 1/3 to Lopez and the remaining between the three others. However options were granted to Chappaz and Mercier at B round to give a new founders’ balance. The pies below give therefore different ratios. Dominique Vidal is not a founder but was working with Banexi when Kelkoo was founded. He joined the founders to become a managing director and received initially 338’000 shares. He received more shares with time but the final number is not known (so I make an assumption in his case). Finally a stock-option plan was created to incentivize employees. Those had virtually 19% of the company at round B. We were only in March 2000 and the data are already complex. The capitalization table can be read on the right part with number of shares or on the left part as percent of the company.

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The situation is even more complex with the acquisitions. First DondeCom (Spain) and ShopGenie (UK) in June 2000. Kelkoo kept about 50% of the shares and the new entrants the other 50%. Also in June 2000, Kelkoo raised its C round of €30M. In September another €6M were raised with the same terms. Initially the price per share was €1.99. But there was a major condition: Kelkko had to provide an exit, a liquidity event to the investors in 2001 or the price per share would decrease to €1.70. There was no IPO or M&A for Kelkoo, i.e. no exit, so that the investors received free shares to reduce the price per share. This implies a valuation of €96M for the C round and the investors of that round owned 37% of Kelkoo. Then came the ZoomIT acquisition, which gave a little less then 30% to the new comers.

Yahoo bought Kelkoo for €475M meaning a price per share of €5.7 if the reader accepts that the total number of shares is correct. The last column therefore gives the value of their shares for all stockholders (but it does not indicate it much these cost; this cost would have to be deducted to know the profit before tax). I can not be too far from real numbers but as I said with my previous examples (Skype, mysql) these numbers are never sure at 100%. The capital increases are however well described in documents from the register of commerce that I bought for this study. The exact number of exercised shares is however unsure. These documents were my only source of information for this study. The history of Kelkoo is also written in the book “Ils ont réussi leur start-up” at Village Mondial (Pearson France). Pierre Chappaz is today the CEO of Wikio and is also the author of an excellent blog, Kelblog. Finally, Pierre made a great presentation of his stroy at EPFL in 2005.

Source: www.euridile.fr

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