Zynga’s planned IPO a winner for Colorado’s Foundry Group Denver Business Journal - by Greg Avery Date: Friday, July 1, 2011, 1:30pm MDT
Zynga’s $1 billion IPO filing isn’t just the biggest news in Silicon Valley tech this pre-holiday Friday — it’s also the biggest jolt of excitement in Colorado’s venture capital scene.
Boulder’s Foundry Group, one of two local VC companies able to raise notable new funds in the recession, was an early-stage investor in Zynga, the online gaming company based in San Francisco. Zynga makes the hit Facebook games FarmVille, Mafia Wars and Empires & Allies.
Foundry Group owns 34.56 million Class B preferred Zynga shares, or 6.1 percent of the pre-IPO company, according to its filing with the Securities and Exchange Commission. Some estimates have said Zynga is trying to value the company at $20 billion, giving Foundry a very valuable stake. Foundry’s 2007 fund invested $1.63 million in Zynga in 2008, the Zynga IPO filing shows. Zynga gets most of its revenue selling virtual goods used in its games, and its 232 million regular players around the world buy lots of virtual stuff.
The company reported making $90.6 million profit in 2010 on $597.5 million revenue. Zynga is the third company of founder Marc Pincus that Foundry Group’s Brad Feld has invested in over the years. Feld is a Zynga board member. He’s also someone whose backing Pincus credits with helping establish Zynga with big Silicon Valley VCs that were initially hesitant about a company creating free games played on Facebook.
Feld’s faith in Pincus has paid off.
Zynga, in a share repurchase in March, paid Foundry $22 million to buy back a portion of Foundry’s shares, the filing shows. There’s speculation that Zynga’s $1 billion maximum offering could increase to $1.5 billion or $2 billion by the time its shares hit the public market.
The Twitter universe has been congratulating Feld and Foundry Group’s other managing directors for having a banner year.
In addition to the Zynga IPO, other Foundry portfolio companies have lucrative exits looming this year. AdMeld, another Foundry Group portfolio company, recently agreed to be bought by Google for $400 million.