Nairaland until last month has been Nigeria’s most visited site for the past 5years, thanks to its spam-free nature and local relevance. Though it lost the place to vanguardngr.com last month, it’s still a site to beat.
Loy, wrote an interesting piece about MIH offer to buy stake in Nairalist and acquire Nairaland.com offering about $1Million. According to him, the deal didn’t work out! Was $1million too small for Nairaland? Considering the fact that it makes about $10,000 monthly through adsense.
Is it really worth it?
Last year, I wrote an analysis of Nigeria’s top internet properties and their worths. It totalled about .6billion Naira for the top 20. In the piece, Nairaland was estimated at N126, 281, 970 (About $850k at the time). It is has grown since then though.
What does it worth?
According to our estimate, Nairaland.com will be well priced at $1.5Million taking its revenue, business model, ranking and goodwill into account. With the little I know about startup valuation, these metrics (above sentiments) are very key in determining worth of start-ups. Forget normal P/E ratio for traditional businesses (eventhough they also counts), they are not VERY relevant in high-growth tech startup.
With Market value worth $1.5million, an offer of between $1.5 – $2.5Million will be a good deal and anything above that is making it overpriced. Do you think Microsoft is silly to have paid $8.5Billion for Skype? No ,no, no! They bought the future! So, to be able to convince Seun with is person and passion, you’ll need more than $1million.
What is at stake here?
- Most visited Nigerian site
- 730,372 Members
- Personal data, interests of the members (This is goldmine if better analysed)
- A possible Social Network Juggernaut
- Nigerian internet market leadership (For now, no clear leader, and buying Nairaland will be a good step to reaching that)
These things are very important for success of any start that wants to lead the way in the country.
I really think anything from $1.5million is a good deal but much is at stake here just as Jerry Yang refused to sell Yahoo to Microsoft for $40billion. It’s not just the money but sometimes it pays to walk away with some money and start something else if you have one. But like others said, if you don’t have another stuffs, you might want to stick to the current cash-cow.
If you were Seun, would you have taken the money?
I have asked a couple of others about taking the money if they were offered, well as expected, some said they would while others said it depends on the circumstance etc. So, what will you do?
Update: Seun has confirmed that the right figure is N2.4million for 60%