Did Venmo founders get payout they deserve?

Tom Paine

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The announcement yesterday that EBay's PayPal was acquiring payment processing platform Braintree for $800 million in cash, combined with the fact that so much attention was being lavished on Braintree's Venmo mobile payment unit (as I discussed yesterday and PayPal President David Marcus also emphasized to TechCrunch) left me pondering why Venmo only sold for $26.2 million when Braintree acquired it just 15 months ago (the deal was done by June 2012 though it didn't become public knowledge until August) if it was such a valuable part of an $800 million deal now. And did the co-founders, Andrew Kortina and Iqram Magdon-Ismail, who started Venmo as undergrads at Penn, get a good deal from Braintree?

Of course, valuations are always a bit tricky when the same party is on both sides. Accel Partners had led Venmo's largest round, and was also a lead investor in Braintree. I'm just mentioning that fact, not inferring in any way that Accel did not take proper steps too see that the interests of both companies were fully represented in the transaction.

But I do hope Kortina and Magdon-Ismail had some kind of earnout provision or equity kicker from Braintree that will give them the type of return they deserve for their efforts.

Philadelphia-born Venmo considered prize in Ebay's Braintree acquisition

Tom Paine

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Ebay announced today it was acquiring Chicago-based Braintree, a web and mobile payments processor, for $800 million in cash. It will become part of Ebay's PayPal unit.

Speculation about Braintree being a target has been heavy for a least a month. Much of the talk has focused on Venmo, the Philadelphia-born mobile payments startup that later moved to New York. Braintree's growth in mobile payments has been said to have been phenomenal paricularly since it acquired Venmo last year for $26.2 million; mobile payments now account for about one-third of Braintree's total payments processing of about $12 billion annually, PandoDaily reported recently. Venmo provides an easy to use tool to send payments via mobile; many are excited about the potential of its new Venmo Touch app.


Venmo's co-founders, Andrew Kortina and Iqram Magdon-Ismail, both attended Penn, where the two were originally randomly paired as freshman roommates. Venmo was founded in 2009; it received a round of funding led by Accel Partners in 2011 and relocated to New York.

See also PayPal’s David Marcus: Braintree Keeps Its Brand And Ops Intact; Venmo Will Be Used For Big P2P Push from TechCrunch.


Also this week, King of Prussia-based Ebay Enterprise (formerly GSI Commerce) made several
significant announcements at its Client Summit in New York.