Careering around the internet yesterday, in typical viral fashion, was a story that Beyoncé earned $300m from Uber’s so far disastrous IPO last Friday.
It’s hard to find the original source of the claim, but fingers point to a New York Times piece on Uber from May 3. To quote:
And Mr. Khosrowshahi has refrained from extravagances like booking Beyoncé to perform at private company functions, as Mr. Kalanick did in 2015, at a cost of $6 million in restricted stock units.
The $6m figure has been repeated across media outlets.
A 4,900 per cent return is the stuff most venture capitalists dream of, assuming the calculations are correct. But as Alphaville friend Jake pointed out on Twitter, the numbers don’t add up.
In December 2014, Uber raised a $1.2bn Series E at a valuation of $40bn. This was bumped up to $2.8bn in February 2015. In the summer of that year, it raised a Series F round of $1bn according to Crunchbase, at a valuation of around $50bn. That translates to $39.64 per share, per a recent FT story. For context, Uber’s valuation is currently $69.47bn, per S&P Capital IQ data.
So let’s assume Beyoncé got her RSU’s at price of $35, lower than the July valuation, but a higher than the December 2014 one (going on the Series F number).
That would make her return, as of yesterday’s share price close of $41.29, 18 per cent. Or an extra $1m or so on top of the $6m she received. 18 per cent over four years translates to a compound annual growth rate of 4 per cent. Slightly less impressive than what’s been reported in the press.
If Beyoncé were to have made a 4,900 per cent return, that would have meant she got given the restricted stock units at a price significantly below the investors in both founding rounds. A cohort which includes Microsoft, MSA Capital, Valiant Capital Partners and Sherpa Capital. We imagine sweetheart deals for musical performers, no matter how small in dollar size, wouldn’t fly with Uber’s investors. But we might be wrong.
No matter, it was still a savvy business move by Queen Bey to take stock instead of cash, so she deserves kudos for making that bet. After all, getting a bond-esque return on investment is better than no returns at all. Which, for those who invested in Uber at a $68.8bn valuation in 2017, has been the case so far.