The acquisition of FanDuel for $4.2 billion and the unfortunate outcome for its founders who received nothing. Watch the full short — free, no account needed.
The acquisition of FanDuel for $4.2 billion and the unfortunate outcome for its founders who received nothing. It highlights an extreme example of an exit scenario where founders did not benefit financially.
Imagine founding a company that sells for 4.2 billion and you walk away with zero. That's exactly what happened with the story of FanDuel. After starting FanDuel and scaling it all the way to where it was, they raised 468 million and they sold that controlling interest in 2018 when the company reached a billion plus valuation. Because of how deal was actually structured, the founders and also all the employees walked away with not a single dollar. Here's ultimately what happened. There was a liquidation preference that actually kicked in at the time of the sale of the business and the investors that came in in 2018 sold the company. They sold it for the minimum that they could to be able to not achieve that threshold for 568 million. Control is everything and actually the board was controlled by the investors that approved the deal that left common stockholders with nothing. What's the
bottom line? Ultimately that cap tables and term sheets matter much more than what founders think. We love to hear your comments.