GitHub Seeks Funding At $2 Billion Valuation

itwbennett writes: GitHub, the most popular Git hosting site, is reportedly seeking $200 million in an upcoming private funding round that values the company as high as $2 billion. "GitHub is an interesting company," said analyst Frank Scavo, president of Computer Economics. "It is partly a hosting service for developers and partly a social media site." And it's a great place to recruit developers. But company-specific factors aside, there's also a lot of money in the market "looking for homes," said Rob Enderle, principal analyst with Enderle Group.

Comments

If Sourceforge is any example

[opus_magnum]

does it mean they will become like them after they're bought?

Re:If Sourceforge is any example

[Anonymous Coward]

Let's hope not, it's been a great service up until today at least.

SourceForge has gone so down that even their mirror hosts are evaluating whether they should provide them resources anymore. There's been a campaign aimed at SourceForge's mirrors to get them to cut their cooperation. It's been somewhat successful and got a lot of attention after people realized SourceForge had hijacked Firefox, too, among other big open-source projects.

Re:If Sourceforge is any example

[Anonymous Coward]

I don't see what open source project hosting site Github has to do with malware distribution site Sourceforge.

Re:If Sourceforge is any example

[gbjbaanb]

See sourceforge - this is how you make money, get a VC to fund your 'exciting and innovative game-changing' service and get pots of cash. Revenue totally optional, advertising irrelevant.

The trouble with businesses today is that some of them have a bricks-1.0 mindset that expects to receive revenue by selling stuff (even if its adverts and malware)! pffft.

Re:If Sourceforge is any example

[AmiMoJo]

The massive over-valuation is looking bad. Investors will require growth and monetization, and their current premium accounts aren't going to cut it. It really isn't a good sign because no matter how well intentioned the staff are and how good they are to work with so far, shareholders demanding value will screw it up.

Sad times. What happened to realistic valuations and growing a long term, responsible business? This just seems like wanting to hype the platform up as much as possible and then cash out at the top, before it all comes crashing down.

Re:If Sourceforge is any example

[cHiphead]

2 billion dollars of funding will bring the same sharks around.

Wtf does github need funding for exactly?

Re:If Sourceforge is any example

[Dunbal]

Hookers and blow.

Re:If Sourceforge is any example

[Anonymous Coward]

Sad times. What happened to realistic valuations and growing a long term, responsible business? This just seems like wanting to hype the platform up as much as possible and then cash out at the top, before it all comes crashing down.

Because in a bubble, lifestyle businesses are a waste of capital. If it's more important to have the word "founder" on your business card than it is to make money, the founder should sell the business at a bubble valuation and use the money to start another.

Which of these companies would you rather own shares in? A small business that earns, say, $10M/y in sales and $1M/y in profits and has a reasonable P/S of 3 and P/E of 30 for a $30M valuation? Or that same business with a bubble-tier P/S of 10-20, a P/E of 100 and a $100-200M valuation?

In the former case, that stable business might last 20 and produce $20M of earnings that could be distributed to the shareholders before it peters out. If you're lucky, it might double those earnings towards the end of that timeframe and be worth $40M to a potential acquirer, or spin off another $20-30M over the next 20-30 years. Best case scenario is the shareholders realize $50-60M.
(How profitable is GitHub anyways? Can anyone hazard a guess?)

In the latter case, selling the company immediately produces a $100M payday, returning at least twice what the lifestyle business would have returned, with practically no risk. If you're lucky, they do a round or two to inflate the valuation to the point where it's big enough that the only exit rounds that can work are either an IPO at a $10B valuation or to to sell to a well-heeled acquirer like GOOG or AAPL.

If you can sell for $10B, it doesn't matter whether GitHub is profitable or not. All that matters from an investment perspective is whether its shareholders can get a better return on their investment by selling out than remaining small. Even if the company falls 95% from its IPO valuation, the shareholders make $500M (5% of $10B) in 3-5 years instead of 30-40 years.

And if you sell to Google and the same thing happens, Google's shareholders eat the loss but it's barely a ripple on the balance sheet. (cf. Dice writing down the value of the Slashdot acquisition). If you're something like Oculus Rift, it may have been worth it to keep you out of the hands of the competition. If you're GitHub, I'm not sure who the potential bidders would be. Neither Google nor Apple are really into the development tools business. Oracle vs. IBM? Maybe the exit strategy is an IPO and let the chips fall where they may.

Re:If Sourceforge is any example

[CODiNE]

It's a cash out. This is how web apps make money, by selling themselves to others. Will THEY then make any money? Who cares!

Enderle?

[NaCh0]

That Enderle guy is still around? He has been so discredited that it's amazing. One thing is for certain, whatever his opinion, the opposite will be true.

Re:Enderle?

[Anonymous Coward]

Github runs Linux man! That means Darl will be entitled to all the brazillions that github gets from the funding, and Rob can finally get paid. Good thing too, 'cause there's not as much money in drunken keynotes as there used to be.

$2b / 9m users

[goose-incarnated]

So each user is worth $222? Please... this has all the characteristics of a bubble. There is no way they are ever going to be able to monetize users to the tune of $222/user.

Git

[Anonymous Coward]

while the gittin's good...

Who?

[bmo]

Rob Enderle, principal analyst with Enderle Group.

This fucking clown? This guy who sided for years and years with SCO? This guy who gets things more wrong than even Dvorak, and at the same time is sincerely not trying to troll (unlike Dvorak) thereby exhibiting his utter incompetency?

Since when does his fucking opinion fucking matter? How the fuck does one get a gig doing what he does and get even NPR to pay cash money for idiotic punditry?

>group

OF ONE FUCKING PERSON. Self-importance, bloviation, and inaccuracy all rolled up into one neat douchebag.

WHY DOES SLASHDOT, OF ALL PLACES, LEND THIS GUY ANY SORT OF CREDIBILITY BY BLOGGING HIS CRAP HERE?

Oh, I know, Dice.

Hnnnnggggghhh...

--
BMO

Re:How the fuck is it "hijacking"?

[danbob999]

It's hijacking when you try to distribute your modified software as the original. Sourceforge is free to fork Firefox and call it SourceFox or whatever. But that's not what they are doing.

Re:How the fuck is it "hijacking"?

[GuB-42]

Firefox may be open source software but the name "Firefox" and the logo are not.
So you can freely change and redistribute Firefox but if you want to call it Firefox, you need Mozilla's permission. Only if you decide to call it something else, like "Iceweasel", you are free to do whatever you want as long as you respect the copyleft.

I am surprised

[Daniel Hoffmann]

I am surprised that github still does not have a job board on the site, not only is it a MAJOR money income, it is also quite useful for the devs themselves. It is one of the few win-win monetization situations as long as the user can opt-out of seeing the job ads. Pretty much any job ad that asks you to send your github profile would be advertising there.