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Examining OpenTable’s $10 Million Foodspotting Acquisition

The numbers behind the deal

 

Foodspotting's best ranked pictures for New York

Foodspotting’s best ranked pictures for New York

In a move that is so logical, we’re surprised it didn’t happen earlier, Foodspotting  – an app and community for sharing food photos – announced today that they’re being acquired by OpenTable.

When we founded Foodspotting, driven by our love of obscure dishes like okonomiyaki, Ted, Soraya and I set out to bring a dish-centric dining guide into the world and watch it grow. We raised some money, grew our team to ten (plus alum), and built a community that catalogued over three million dishes. Today, towards the same end, we’re so happy to have found a great home for Foodspotting where our site, app, and community can continue to thrive while our entire team continues to focus on making your dining experiences awesome.

We’ve already been working closely with the OpenTable team as partners: In addition to making restaurant reservations via Foodspotting, you may have seen Foodspotting photos from select restaurants popping up on OpenTable. But we both realized we could create smarter experiences if we could integrate more deeply by, for example, recommending dishes when you make reservations to enabling restaurants to showcase their best dishes. We look forward to augmenting your dining experiences with Foodspotting’s recommendations to forge the shortest path between you and great food! {Foodspotting}

And for the juiciest part of any deal, on to the numbers!

$10 million: the reported price of the acquisition

$1.25 billion: Current OpenTable (NASDAQ:OPEN) Market Cap

$3.75 million: the amount raised by Foodspotting prior to acquisition

10: the current number of Foodspotting employees

3 million: the number of photos Foodspotting currently has in its database

The only surprise in today’s announcement comes with the relatively small price tag. Foodspotting will continue to operate independently of OpenTable, and existing employees will stay on board, which is encouraging for existing users since the normal process is to buy a team for talent and shut the actual product down. So while it does appear that Foodspotting was purchased for its team, keeping the app going is an indicator that the community and product were targets as well.

Which brings us to the acquisition price. With a $3 million series A, the company was very likely valued at more than $10 million. A $10 million purchase wouldn’t be considered a great success for later stage investors, though they probably did get their money back. Stories of the difficulty startups face in trying to raise later stage rounds abound, so even if the result was only break even financially, in the current fundraising climate this was probably not the worst option for Foodspotting’s founders or investors, and a possible explanation for the timing.

 






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