Paypal pays again
Emailed on November 22nd, 2019 in The Friday Forward
This week it was announced that PayPal has agreed to buy Honey, an app and browser plug-in for e-commerce coupons, for around $4 billion in cash and stock.
It’s PayPal’s largest-ever acquisition, and the largest-ever purchase of a Los Angeles-based tech startup.
Paypal has a history of successful strategic acquisitions (see Braintree and Venmo for less than $1B each), but this one is a bit puzzling. A few stats on Honey:
Saved $1B for users this year
Currently at $100M in revenue growing >100% y/y and profitable
Works with 30K merchants and has 17M MAU (valuing it at roughly ~$230/user)
Raised ~$40M prior to acquisition
The crazy stat to me is the $100M in revenue and a $4B purchase price. And the fact Honey is a browser extension.
That small amount of money raised is both impressive and a perfect example of Power law in VC. Mucker Capital invested $3 million into Honey Science and will return ~$280 Million through this sale. The fund that invested that money was $20M.
That's not a home run, that's 3.5 grand slams with one swing of the bat.
