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Tesla Gets $82.5 Million Investment
- Thread starter dpeilow
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- Tesla Inc.
I wonder how much equity Fjord got for that capitol. The Daimler deal was harder to evaluate because that is more of a partnership with some technology exchange. This is more likely straight equity. It probably helps to have a high profile company like Tesla in their portfolio.
Fjord Capital Partners the clean energy private equity specialist Fjord Clean Energy Fund investing for a low carbon world
Fjord - what we do
Fjord Capital Partners the clean energy private equity specialist Fjord Clean Energy Fund investing for a low carbon world
Fjord - what we do
Investment strategy
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graham
Active Member
This is great news too. I hope with the Gov't loans, Daimler and Fjord it means that the Model S production release date will not be as optimistic as they originally sounded. If this allows them to truly release the S in the time they have been talking about, it will be a truly great thing.
Hey now. Clearly Tesla Motors was reading about my concerns and they went out and got investors to cover themselves.
I am definitely in tune with the issues here.
In fact, I recently spoke with a Tesla employee who mentioned being diluted into oblivion with all of these new investors.
Notice that Daimler had to pony up cash also to stay at almost 10%.
I wonder what percentage Elon Musk is down to.
Arnold Panz
Model Sig 304, VIN 542
Dilution is a legitimate concern at this point -- how much more money does Tesla need? I think it has probably reached a tipping point where people see it as viable and likely to survive and thrive, so raising money really should no longer be a concern. I hope that they use at least some of the money to buy back shares from employees and/or original investors so they can get some cash out of the company. These were the people who invested in Tesla when there really was no guarantee of success.
I also see that the article confirms Dania Beach (misspelled in the article) as the Miami location.
Dilution of whose shares? No doubt this investment occurred at a higher valuation than the previous ones. The board is controlled by Musk and the VCs that invested the majority of early round funding.
Tesla is going to need alot of money to become anything more than a niche automaker. I'm sure we'll see more of this.
Arnold Panz
Model Sig 304, VIN 542
Dilution of all existing shareholders' shares. In this particular case, I was thinking of employees, most (or all) of whom probably receive lower salaries than they would normally merit in exchange for restricted stock (and/or options). When an investor like this comes along, they don't "sell" the new investor existing shares, but simply create new shares, which ultimately dilutes the value of everyone else's shares because it increases the denominator on the total number of shares. Of course, if the company hits it huge in its IPO and everyone makes a killing, these things become long forgotten, but it is a very real issue for anyone holding shares.
Another way to look at this is that Daimler had to add additional money to its original investment (which we think was around US$50mm) to maintain its 10% ownership stake, so owning 10% of Tesla used to cost $50mm, now costs maybe $55mm or something.
Yes, Tesla needs a lot of money if they want to go mass market, but that will be done, eventually, through going public with an IPO. Until then, they need to make sure those who have invested early are able to get outsized returns for the increased risk that they took funding this company at the beginning, and there's really not much they can do with any more cash at this point, other than open more stores and do massive amounts of marketing, and that's still a fraction of what they now have in the bank.
I understand what you're saying, but I disagree. Dilution is going to keep occurring until Tesla as a business is self-sustaining. If this investment occurred at a valuation of 750 million for Tesla then all existing shareholders saw their nominal value of shares increase(I know they aren't liquid, but its still the case). Which is to say that Daimler's investment of 57.5 million is now worth 75 million. And everyone prior to Daimler saw an even bigger percentage increase in value. The fallacy that the employee is suffering is imagining his stake is that of a company much more valuable than Tesla actually is. If he views his ownership as a percentage of a 2 billion dollar enterprise, then any investment at a valuation less than that is dilutive and anything greater than that is accretive to his nominal share value. Forgive me then if I don't put much weight in his whining about his stock options.
So how much is Tesla worth? 750 Million? 2 billion? 10 billion? I'd argue alot less, but then again, I'm probably more negative than most here on the size of their technical moat, first mover advantage and Tesla's difficulty successfully competing against large entrenched government supported automotive companies.
Bradleybang
Member
Tim,
I agree with you. Dilution to employees is irrelevant. Its share price that matters.
I have no insider knowledge but will draw an example as follows;
Lets say I was hired as a head marketing guy by Tesla way back in the beginning. In my package, I was prommissed 500 (.5%) shares of 100,000 outstanding over time. Lets assume I thought the company was worth a cool $50M. So, I would guess the share price to be $500 per share ($50M/100,000 shares). My shares would be worth $250k. Nothing to sneeze at but not gonna retire on that.
A couple years later Daimler comes in and buys 11,000 shares (10% of new 111,000 total shares out now) for $50M. That changes the share price to $4,545 per share and the company has a new valuation of $500M. My shares are now worth $2.27M.
Then a couple months later Fjord Capital comes in and buys 10% for $82.5M.
Doing the math. Fjord Capital buys 12,500 shares for $82.5M means new valuation of $6,600 per share. However, Daimler gets to up their shares by 1,500 to keep their 10% at the old $4,545 price they paid a couple of months ago.
Yes, I have been diluted to .4% (500 of 125000) outstanding shares but the company could now be valued at $825M. And the potential value of my shares could be $3.33M.
Yes my vote counts less in the shareholder meeting but did it ever really matter?
I agree with you. Dilution to employees is irrelevant. Its share price that matters.
I have no insider knowledge but will draw an example as follows;
Lets say I was hired as a head marketing guy by Tesla way back in the beginning. In my package, I was prommissed 500 (.5%) shares of 100,000 outstanding over time. Lets assume I thought the company was worth a cool $50M. So, I would guess the share price to be $500 per share ($50M/100,000 shares). My shares would be worth $250k. Nothing to sneeze at but not gonna retire on that.
A couple years later Daimler comes in and buys 11,000 shares (10% of new 111,000 total shares out now) for $50M. That changes the share price to $4,545 per share and the company has a new valuation of $500M. My shares are now worth $2.27M.
Then a couple months later Fjord Capital comes in and buys 10% for $82.5M.
Doing the math. Fjord Capital buys 12,500 shares for $82.5M means new valuation of $6,600 per share. However, Daimler gets to up their shares by 1,500 to keep their 10% at the old $4,545 price they paid a couple of months ago.
Yes, I have been diluted to .4% (500 of 125000) outstanding shares but the company could now be valued at $825M. And the potential value of my shares could be $3.33M.
Yes my vote counts less in the shareholder meeting but did it ever really matter?
Bradleybang
Member
I know ... I know ... You want it worded closer to reality.
TEG wants a 5000 for 1 split and James wants the intricacies of various funding rounds worded by attorneys.
James does have a point. I'd bet my Roadster that in some of those funding doc's there are numerous terms and conditions to allow further investment pre IPO for these VC's. Its those terms that give VC's the big bite of the ripe apples and squeeze juice via dilution to the small employee at the time they can actually market the shares.
My original point stands... the minority-employee shareholders care more about price per share than dilution of their voting percentages.
TEG wants a 5000 for 1 split and James wants the intricacies of various funding rounds worded by attorneys.
James does have a point. I'd bet my Roadster that in some of those funding doc's there are numerous terms and conditions to allow further investment pre IPO for these VC's. Its those terms that give VC's the big bite of the ripe apples and squeeze juice via dilution to the small employee at the time they can actually market the shares.
My original point stands... the minority-employee shareholders care more about price per share than dilution of their voting percentages.
Tesla Shares Trade On Startup SharesPost Marketplace | CleanTechBrief
Actually make that 10,000:1... $1 billion / $10 per share=100 million shares...
Actually make that 10,000:1... $1 billion / $10 per share=100 million shares...
According to what I heard from a source, that trade was strange because it happened at about 2x what the Tesla valuation was at that time.
So it might have been a faked trade on that new system. Someone matching up a trade between two parties that are actually the same person. For example, the family trust account buying it from another of their accounts. It doesn't matter to them, but it establishes a recorded trade at that price and created the $1 billion news article.
So it might have been a faked trade on that new system. Someone matching up a trade between two parties that are actually the same person. For example, the family trust account buying it from another of their accounts. It doesn't matter to them, but it establishes a recorded trade at that price and created the $1 billion news article.
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