A hot mobile ad startup based in Palo Alto called AppLovin has confirmed that it sold a majority interest in itself to a Chinese private equity firm, Orient Hontai Capital, for $1.4 billion.
AppLovin employs 115 people, a spokesperson confirmed to Business Insider. So that’s a hefty exit for them.
The mobile ad network was founded in 2011 by Adam Foroughi, Andrew Karam and John Krystynak and has never taken traditional venture capital funding.
It raised just $4 million in angel investment from backers like Eduardo Vivas (Bright.com and LinkedIn), John Burbank (Passport Capital) and super angel Maynard Webb (the chairman of Yahoo and board member at Salesforce, Visa and Everwise) via his Webb Investment Network.
And it’s been on fire practically since it launched, doing over $1 million a month in revenue by the end of its first year,Foroughi told Forbes’ Dan Primack:
“I couldn’t find anyone to give us an investment at what I thought was a reasonable starting point valuation (maybe $4 million or $5 million) and, by the end of our first year of operations, we were profitable and doing over $1 million a month in revenue,” he explains. “So I put together a round with angels not really because we needed the cash, but because I thought these were influential people who could help us grow.”
AppLovin’s claim to fame is that it delivers more personalized ads, it says. It’s been particularly successful with mobile ads.
The IPO alternative
The San Francisco based startup stayed in “stealth mode” for its first two years, meaning it didn’t do a lot of sales, marketing and public relations and instead focused on developing its products. But during that time, it still signed up 300 customers, all through word of mouth, CEO Adam Foroughi told Business Insider.
Two months after its official launch, in July 2014, it had a $100 million revenue “run rate” and high-profile users like Uber, Spotify, and Opentable, Foroughi said.
Last year, the company hit $234 million in revenue, a source confirmed to Business Insider, and in 2016, it was on track to bring in nearly half a billion dollars, according to the press release.
While the IPO market remains soft in 2016, the M&A market has been on fire. Plus, Foroughi told Primack he’s a “private person” and didn’t really want to be the CEO of a public company. This sale sets AppLovin up to enter the Chinese mobile ad market.
In addition to AppLovin, Foroughi is an avid angel investor having backed startups like Bright.com (sold to LinkedIn), and Open Install (sold in December 2011). He’s also backed Path, HomeJoy, ZenPayroll and others.