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Comment by Keyframe | Hacker News Reader

Congratulations, great news for guys that worked hard on it. May I ask what is the reasoning/breakdown of $20 million valuation? For example id Software was sold for, rumor has it, 105 million dollars - only 5X the amount, while they generated over $2+ Billion in revenue with their products over time.

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That price seems very low for an incredible brand franchise and IP rights to Quake, Doom, Wolfenstein, Rage -- only $105mm? An article I picked up on it indicates they had 105 developers at the time of acquisition.

I would bet that rumor is false, or that there was some sort of extreme extenuating circumstances that we're not privy to.

It was indeed $105 million as SEC filing showed http://sec.gov/Archives/edgar/data/1092835/00010928350900000... I am pretty sure there were some additional benefits, as in "you don't tell us what to do, ever" or something.

I thought the $105m was new debt raised? I could be wrong as I'm not used to look at these forms, but I thought the story went that it was AT LEAST $105m because that was the ADDITIONAL raised. I might borrow 100k for a house, doesn't mean I only spent 100k for the house.

But, as I say, I could be wrong - I'm not an American so I haven't seen these forms too much :-)

I don't know either to be honest, paper says: "Total Offering Amount $105,000,000 USD | Total Amount Sold $105,000,000 USD"

My reading is that they raised $105 million via convertible notes and promissory notes "in connection with the acquisition of substantially all of the assets of Id Software, Inc.". Traskjd has it right--this might mean they spent $105M on id, or it might mean they only needed to borrow $105M of whatever they spent.

What matters is not how much revenue you generated over time in the past, but how much you are generating right now and what the expectation is of future revenues.

If you get down to just numbers, the 'standard' way of valuing any enterprise is to calculate the current value of their future cashflow. This is why (many) V.C.s ask you for a revenue projection. It is debatable whether this is the right way of doing things; in the case of most startups it may be the wrong way, but if id Software was making, say, only 10M/year at the point they got bought, and left alone, if their cashflow would have stayed the same or stagnated, 105 million would be 10.5x their yearly profits which is decent.

I love how people think they can just "calculate the value of their future cashflow"...isn't this what we are preached to stay away from now? (i.e. Steve Blank's idea on "business model > business plan")

If you are saying projected cash flows are a bad way of valuing startups, I agree.

I can't believe it would be that low, unless they were in some trouble, lots of debts. But they are a software house, so that should not happen.

id Software was sold?

Last year to ZeniMax Media http://en.wikipedia.org/wiki/ZeniMax_Media

And Carmack is well on his way to becoming the next Elon Musk.

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