Why are These Millennial-Generation Printers Smiling? – October 2014 M&A Activity
Vistaprint recently came calling on Printi, a two-year-old Brazilian startup. The company was founded by a pair of young (and now apparently very happy) entrepreneurs who met while working together as interns at Goldman Sachs. The millennial-generation buddies realized that Brazil was wide open to introduce automated web-to-print aggregation technology. They borrowed ideas from the more developed market in Europe, and modeled their company essentially as a Vistaprint look-alike.
It turns out that the two partners’ laser-like focus on developing the front-end technology was a great move. The company built out the ordering and customer service systems, outsourcing the actual print production. That strategy has resulted in a tremendous return on the founders’ initial $50,000 investment: Vistaprint’s investment of $25 million for a minority share of Printi imputes a value for the whole company in excess of $50 million.
With the front-end software and customer support system in place, the company will use the majority of the capital infusion to build their own “Vista-style” automated factory. A portion will be used to buy out the first round venture capital investors, who reportedly tripled their investments in two years.
The founders report that company has been operating at “more or less break even” so we unable to infer a multiple of EBITDA. However, looked at in terms of annual sales, which was disclosed, the price paid equates to a value of more than 16 times last year’s revenue of $3 million. If the company meets its goal of $10 million sales in 2014, the multiple paid on the projected sales is still an extremely respectable 5 times revenue. For the printing industry, these are extraordinary numbers – clearly this company is being valued for its potential growth and as an advanced marketing technology play that just happens to have printed products as the output.