Why I (initially) passed on investing in a startup that later on got me a 40x return after being acquired by eBay.

Six years ago, I met a guy called Jon Uriarte who wanted to pitch me on his startup, Ticketbis in Bilbao (Basque Country, Spain).

I liked Jon. He’s nice. He’s a great guy. He’s always smiling. The kind of person that seemed easy to get on well with, which is one of his great virtues. He showed me his pitch deck. He and his co-founder had a nice powerpoint, but they didn’t have any minimum viable product (MVP), no team, nothing. Valuation: 1 million euros (US$ 1.1M). An idea, a plan, just a pitch deck, worth one million. Very expensive. And if today it seems expensive, imagine six years ago, when the ecosystem of investors in Spain was practically non-existent.

There were more drawbacks:

-2 CEOs. If you see two co-CEOs at a startup, run away. Textbook. I know first hand success stories with co-CEOs, like Educaedu with 2 and Userzoomwith 3 co-CEOs, but by default this is a big red flag.

-They didn’t have any experience as entrepreneurs either. Nothing.

-They had no clue about the internet and technology. Their background was in investment banking, very 1.0.

It was not a good idea to invest, so I said no. I passed on investing in Ticketbis.

A few weeks later, Jon came back to me. I saw a lot of progress. I was impressed. They had a team, they hired a key player from a competitor, they seemed to know very clearly what they wanted to achieve and what the opportunity was. And on top of that, they already had all the investment they wanted. They didn’t even need my money anymore. Plus, because of all the interest they had in their venture, the valuation had now gone up from one to two million. A powerpoint, a good team, and a better developed project (still no product), was already worth 2 million!

I started to like Ticketbis much better, and I saw the positive things about it:

-I really liked the market of secondary ticket sales. I had taken a look at it a year earlier and I was very curious about it.

-Jon and his co-founder Ander had very good educations from top Universities in Spain (Deusto and Comillas). I’m not a big believer that a college education can help you to become a great entrepreneur, but it was a plus in this case.

-They had a very good network. Both founders where very well connected in the Spanish ecosystem.

-I could sense their tremendous ambition. This was key for me.

So, although I had passed on them the first time, in the end, I gave them one of their first checks, first money in, at a valuation of 2 million euros.

A few days ago, Ticketbis was sold to Ebay for a reported 165 million euros, $187M (the actual number is confidential). After this deal, my initial investment has been multiplied by 40, which means this is the best investment I’ve had by far to date, and probably the best I will have in my whole life. Unfortunately, an investor finds very few deals like this during his lifetime.

A good project in a good market, run by two rock stars with a very good business education and enormous ambition, able to execute fast and impeccably. Jon Uriarte and Ander Michelena, a perfect fit for a success story.

I was lucky enough to have them come to me in the beginning, and even luckier to give them their first check. I almost passed on them, but I changed my mind in time.

The investment in startups is extremely risky business and, in general, it is not profitable at all. But sometimes one can find “things” that change this situation totally: one single deal can cover the rest of them, and give good profitability to an entire portfolio.

(This post was originally published in my blog)

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