500px acquired by Chinese Media Company Visual China Group for US$17M
On February 26, 2018, Visual China Group (VCG) acquired 100% of 500px Inc. for a reported US$17M, according to Chinese data provider JRJ. A Toronto-based online photography community and marketplace, 500px was founded in 2009 by Evgeny Tchebotarev and Oleg Gutsol, both Ryerson graduates. The Company raised a total of $22.3M in three rounds: a $525K in June 2011; a US$8.8M Series A round in August 2013 led by Andreessen Horowitz & Harrison Metal, and a US$13M Series B round in July 2015 led by Visual China Group.
The acquirer VCG, the lead in 500px’s last financing round, is a Chinese image licensing company which according to 500px Inc. CEO Andy Yang has a strong presence in the Chinese market, “with over 15,000 licensing customers and leads the market in image distribution”.
Given the two companies’ working history and the potential for further collaborations, Andy Yang says this was “an opportunity to partner with a company we’ve worked with for many years, which has abundant resources and connections”. “VGC’s launch of 500px.me in China has been very successful, and this partnership will allow us to grow and strengthen our vision for the 500px community, and ultimately, give our users a better experience.”
While we are obviously not privy to the actual transaction value or structure, we are a little surprised at the “reported value” of US$17M. While that amount represents consideration for non-VCG shareholders’ ownership position, it looks to us that Pre-Series B investors received 2x on their invested capital.
Hopefully, the earlier investors are happy with their return and are looking positively on this exit as ‘a bird in the hand” and are moving on from what appears to be a very competitive marketplace. Either way, congratulations go out to the team at 500px Inc., we look forward to following up on their future challenges and achievements. We think Canada produce solid start-ups!
Second photo-sharing transaction within last 9 months.
The acquisition of 500px Inc. is the second photography eCommerce transaction to have taken place in Canada within the last 9 months. The previous one being the acquisition of Toronto-based Flashstock by Shutterstock (NYSE: SSTK) for US$50M. It’s certainly interesting to note that Flashstock’s had a total invested capital of US$3.1M, particularly when compared to the 500px sale value.
Flashstock was founded by Grant Munro and Michael Scissons in 2013. The Company developed a proprietary platform that enabled enterprise marketers to efficiently create custom branded content in order to meet the growing demand of multiple marketing channels. The acquisition took place in June of 2017, only 3 years after the founding of the company.
Both acquisitions remind us of another prominent photo-sharing site, founded by Stewart Butterfield in Vancouver in 2004. After only a year in operation, Flickr was acquired by Yahoo Inc! (NASDAQ: AABA) in 2005 for US$25M, an amount at the time seen as huge. How quickly times and valuations changed. Stewart resigned from Flickr in 2008 and founded the fast-growing Slack communication platform in January 2009, which received US$790M funding to date and has established itself as a market leading enterprise workflow and information sharing tool.