Sulake 9th most valued digital startup
At 25 times revenues Sulake is valued 9th in Alley Insider valuation for digital startups. The valuation is purely based on revenues and show the potential of companies in totally different perspective in favor of companies that have valued revenue creation, for example Facebook is valued at 9 billion USD instead of the 15 billion valuation which Microsoft validated when it invested in Facebook. More on the SAI25 at AlleyInsider.
This list tells something of the tides that are on the way, as tells this blog post. Companies are valuating themselves to check where their valuations linger. Sulake does relatively well when compared to the valuations of other US companies which have been hyped a lot in the recent months without a proper business model.
Is this a new sign as a result of the significant drop in investments that has been noticed in the US? Remains to be seen.
pni Said,
April 29, 2008 @ 3:03 pm
Isn’t it Habbo in the list, and not Sulake per se? But the more important question I think is: when is a startup no more a startup? I mean, there’s like Craigslist (age about 13 years) as no. 3 on the list. Is that really a startup?
Antti Vilpponen Said,
April 29, 2008 @ 7:03 pm
Wikipedia the mother of all definitions states startups as:
“A startup company or start-up is a company with a limited operating history. These companies, generally newly created, are in a phase of development and research for markets. They have an uncertain future, and may result in a spectacular success, or failure.”
So generally newly created, but not necessarily. However if you define a company that is in a phase of development - that would seriously make most companies startups (well at least those that want to evolve).
Joe Said,
May 6, 2008 @ 1:59 pm
Respectfully, your completely off base. The Habbo / Sulake valuation is not “purely based on revenues” or pnl but on user registrations. Sulake as a Group and HABBO as a title is losing money (Sulake or HAbbo has never had a profitable year), its revenue is declining from previous years and its mediocre management is not disclosing its numbers - if they were any good they would of course. So this valuation is based on reported user regs. Check your facts. Your post is about as accurate as these whimsical valuations.
Antti Vilpponen Said,
May 6, 2008 @ 2:11 pm
Thanks for your comment Joe. AlleyInsider’s valuations had valued all these companies at 25 times their annual revenue. Revenue, or turnover, on the other hand is defined as “all the money received from running the business”. It’s not the same as profit or loss, which is the amount of money left (or lost) after all the deductions are made.
Habbo’s valuations in other cases is calculated based on the amount of members and yes, the amount of registrations they accumulate, but in this case AlleyInsider based the valuation on 25 times the 50 million USD they have generated in revenue (I’ve seen something close to that being tossed around in numerous seminars and I’ve also heard it from sources close to the mgmt).
Joe Said,
May 7, 2008 @ 11:56 am
Your welcome. Sulake made approx 62 mill usd in 2006 and the less than 50 million usd in revenue in 2007 is a dramatic drop off. Also, Sulake lost money both years - about 7 mill in 96 and 2.5 mill in 07. For any company to be legitimately valued at 1 bill USD a company would need to generate 100 USD mill in revenue with an operating profit of 10%. Also it is noteworthy that Sulake is combining HABBO revenue with Dynamoid (IRC Galeria) revenue and the Dynamoid division profitability to offset HABBO losses. Companies in the same space like Webkinz (approx 70 mill usd with 30-40% operating profit) and Linden (approx 50 mill usd rev with 5-7% operating profit) are more realistically valued.
Aapo Kyrölä Said,
May 13, 2008 @ 7:30 pm
I would like to comment that Joe’s figures are incorrect. We are not disclosing numbers for now, but certainly we haven’t had a drop in revenue 2006-2007.
Aapo Kyrölä
co-founder of Sulake
Arctic Startup » Sulake is planning to go public Said,
May 29, 2008 @ 6:29 pm
[…] Soininen thinks Sulake starts to be big enough for an IPO. Soininen’s comments takes place after Sulake was valued 9th in Alley Insider valuation (at 25 times revenues) for digital startups. Read more on the story here. […]
joe Said,
June 4, 2008 @ 11:23 am
While Sulake Group total revenue may not have dropped due to the acquisition of profitable Dynamoid / IRC Galleria and adding its revenue to HABBO revenue (Sulake Group rev = IRC rev + HABBO rev), HABBO revenue from the HABBO portfolio (mostly HABBO Hotel end user rev) most certainly did decline thus devaluing the value of the HABBO property itself.
joe Said,
June 19, 2008 @ 11:45 am
Interesting to see Aapo does not refute this fact.
joe Said,
June 19, 2008 @ 11:49 am
There are many problems with a Sulake IPO,
1. HABBO revenue decline in the past 2 years;
2. Sulake has never been profitable and has lost money every year;
3. HABBO faces an increasingly competitive kiddie virtual world landscape and has not been able to develop as a Teen brand;
4. Internationalization strategy is flawed with new country launches dependant on domestic partners that take revenue shares of 50% and make customer / end-user ownership questionsable;
5. USA has never developed to expectations;
6. AD Sales revenue has always lagged;
7. No synergy between IRC and HABBO;
8. Tailored projects (is Disney VMK & Coke studies) failed under P. Ilola’s management …