Bebo founder’s early stake in Pinterest multiplies 250-fold
THE British founder of the defunct social network Bebo has emerged as one of the winners from Pinterest’s $10bn (£7.7bn) flotation after backing the photo sharing app eight years ago.
Michael Birch, who sold Bebo in 2008 to AOL for $850m, before it was crushed by Facebook, first invested in Pinterest eight years ago when the company was valued at just $52m. The San Francisco photo-sharing app’s listing on the New York Stock Exchange on Thursday valued it at more than $10bn, and its value rose to almost $13bn after shares rose by 25pc in early trading.
The size of Mr Birch’s original investment is unknown, but the original stake has multiplied in value 250-fold. He has described it as his single most successful investment. The British entrepreneur made his fortune when he and wife Xochi sold Bebo, one of the social network pioneers, to AOL in 2008. He later said that AOL overpaid for the company.
Mr Birch acquired an equity stake in the social media company Pinterest the year after it was founded. He took part in two early venture capital rounds in 2011, one worth a total of $10m that valued it at $52m and a second that raised $27m at a $266m valuation. Every $100,000 invested in each round would be worth around $30m today. Mr Birch founded Bebo in 2005 and it became the most widely used social media site in the UK with more than 10.7m users. When it was sold to AOL, it was reported that Mr Birch had a 70pc stake in the company and therefore personally netted $595m from its sale.
The company soon started to unravel amid the rise of Facebook, and was sold to hedge fund Criterion Capital Partners before filing for bankruptcy. In 2013, the Birchs bought the company back for just $1m. Today, it has evolved into a game streaming site.
Mr Birch has invested in a host of Silicon Valley start-ups including the travel app Couchsurfing and the meditation app Calm, which was recently valued at $1bn.
Mr Birch did not respond to requests for comment.