Freelance services marketplace Fiverr has raised $60 million in funding. Square Peg Capital led the round with participation from return backers Bessemer Venture Partners, Accel and Qumra Capital. Have the new investors made a good deal or not?
According to the Zirra Rating System Fiverr is now valued at $250M-$300M, representing a 4-5 multiplier on the latest investment. If this was the valuation then so far the investors have done reasonably well. The expected exit valuation is where the catch is. Fiverr is Zirra evaluated with a projected exit value of $500M-$600M, representing a modest 2x multiplier on the current valuation.
In addition, Fiverr is Zirra projected to require additional $40M is future financing, presented further potential dilution to the current investors.
So Bust or Burst? Depending on your point of view. Fiverr is definitely a growing company with an ambition of becoming a unicorn. Zirra doesn’t feel it’s there yet. While a 2X return in 3-4 years isn’t necessarily bad at these stages, the new investors may not even begin to seriously entertain selling for that price and are likely to be thinking IPO.