Twitter paid $5m-$10m to acquire Posterous
After yesterday’s news about Twitter acquiring Posterous, I was curious to know how much Twitter paid for the acquisition. Through the announcement yesterday from Twitter, it was clear that they were buying up the blogging site to secure great talent, but how much were they willing to pay?
From one tweet yesterday, Twitter HR person @che said that the new additions to the Twitter team was 36 new hires; their biggest yet. That is a large group of developers, programmers and designers. Fast Company makes a good point that part of the talent acquisition was to snatch up former Apple employees like engineer Adam Huda, which does make sense since Twitter and Apple have become cozy in the past year.
Startup founder Imran Ghory chimed in on Quora, answering exactly what I was curious about. How much did Twitter really pay for Posterous, which essentially was a strategic move to get talented people over to Twitter which can also be used to expand on the Twitter-Apple relationship.
From Ghory’s Quora post on how he came to the $5m-$10m price tag:
Given the number of employees and the amounts they’ve raised I guess their burn rate was around 250-300k/month (that’s probably on the large side). Their series B was only raised 6 months ago so based on their burn rate I’m assuming they’ve still got 3m-4m of that in cash so that would be the lower bound for the acquisition.
Given the company probably had 12 months of cash left I suspect the Series B investors would only have agreed to a sale if they got all their money back (they’d have liquidation preference anyway so they’d get their money back first), so that probably means a lower bound greater than $5m (the size of the Series B).
Anything over $10m would be high for a talent acquisition so that’s probably a decent upper-bound.