A man who likes his food (and his £££), Mr Quango was onto the oddities of the Ocado flotation like a flash. Since then, our friends at Alphaville have been all over it like a rash. August may be the official Silly Season, but evidently we’ve started early this year and the investment commentariat in general has been letting us understand, more or less subtly, that Ocado is an IPO that won’t fly at its chosen altitude.
I’ve been in the PE/VC game for a while, on both sides, and there are a number of cast-iron rules about financing pitches (or ‘decks’, as they are known, as in deck-of-ppt-slides):
- the total market they are attacking is always worth at least 1 billion (of whatever currency seems appropriate)
- “if we get even 1% of this market, that’s 10 million”
- “we think we are unique”, etc etc
(The answer to this last assertion is of course: then you obviously don’t know how to use a search engine)
The killer is always the valuation. If you’ve ever watched Dragon’s Den, you’ll know that no budding entrepreneur ever values their leeedle company at less than 1 million (of whatever currency …). “I’m looking for £150,000, in return for 15% of the company”, it’s always the same. I have seen this myself so many times it is scarcely even droll any more.
Now Ocado is the baby of some ex Goldman’s types - the chutzpah is not in short supply. So they are going for full IPO; everything has been scaled up: and Lo! Ocado is worth £1 billion !
Or not. Do yer own DD … and be sure to read Alphaville. And Mr Q.