Yuri Milner, the CEO of Russian investment and operating company Digital Sky Technologies, had quite a 2009. I had a chance to sit down with Milner today at the World Economic Forum in Davos, Switzerland for a short video interview.
The company now holds substantial equity in two of the hottest pre-IPO startups, Facebook and Zynga. And their innovative way of structuring deals, where they buy both preferred stock from the company and common stock from employees, is becoming the hot new way to invest in startups. In fact, people are now referring to “DST-style deals,” even where DST isn’t one of the investors. See Yelp, for example:
The size of the rounds is in the $50 million range, but includes both a primary investment component as well as a secondary offering for long time employees. These deals are now being referred to as “DST deals,” since DST first invested in Facebook in May 2009 at a $10 billion valuation and later funded employee buyouts at a $6.5 billion valuation. They did a similar deal with Zynga.
I first met Milner the day he announced his investment in Facebook, where he and Facebook CEO Mark Zuckerberg explained the details and rationale for their investment in an exclusive TechCrunch video interview.
The price he paid for his Facebook stock – a $10 billion valuation – was scoffed at in May. Today, it’s clear he got a great deal as Facebook common stock is trading at $14 billion and above. The Facebook common stock purchased by DST last summer cost Milner just a $6.5 billion valuation.
It was just a few months later that Milner was in the news again, beating out the competition to become the lead investor in a huge venture round for Zynga.
We’ve had our fun with Milner and DST, watching as the Russian firm stepped in and paid higher prices for hot startups than local VCs would even consider.
But the reality is that DST’s investment decisions look pretty damned smart with the benefit of hindsight. And the entity isn’t really “Russian” anymore – Milner is making almost all of his investments outside of Russia, and most of the new investors he’s bringing in to fund all this activity are non-Russian.
More and more, Milner is just looking like a really smart and really aggressive investor.
Digital Sky Technologies is a growth focused investment company specializing in late-stage, high-growth, private companies in the global Internet industry. The company has pioneered a model to provide liquidity to founders, employees and early investors through mixed primary and secondary transactions. These transactions are often referred to as DST type deals in the Internet world. The company was founded by Yuri Milner, and after building Mail.ru Group, DST gained international prominence through its investments in Facebook, Zynga and Groupon.
Facebook is the world’s largest social network, with over 1 billion monthly active users. Facebook was founded by Mark Zuckerberg in February 2004, initially as an exclusive network for Harvard students. It was a huge hit: in 2 weeks, half of the schools in the Boston area began demanding a Facebook network. Zuckerberg immediately recruited his friends Dustin Moskovitz, Chris Hughes, and Eduardo Saverin to help build Facebook, and within four months, Facebook added 30 more college networks. The original...
Zynga was founded in July 2007 by Mark Pincus and is named for his late American Bulldog, Zinga. Loyal and spirited, Zinga’s name is a nod to a legendary African warrior queen. The early supporting founding team included Eric Schiermeyer, Michael Luxton, Justin Waldron, Kyle Stewart, Scott Dale, John Doerr, Steve Schoettler, Kevin Hagan, and Andrew Trader. Zynga’s mission is connecting the world through games. Everyday millions of people interact with their friends and express their unique personalities through our...