Yuri Milner
What is DST style investing and where did it come from? Turns out that when Facebook was seeking a private placement to the tune of a few hundred million dollars for future growth, in stepped Yuri Milner. Mr. Milner is the CEO of a Russian based private venture and operating firm called Digital Sky Technologies (DST).
Basically, he proposed a financing in which he split the funding between the common shareholders, read employees, and the company. Thus, employees could sell part of their holdings in advance of a public sale, while the remaining funds would be used by the company to fuel future growth. A star was born; the “DST” style of investing.
Look for more companies who are showing dramatic growth and yet not ready for a public financing to follow suit. Already Digital Sky Technologies has investments in Facebook and Zynga, two of the hottest pre-IPO companies out there.
Personally, I like the idea. First and foremost, employees dedicate and enormous amount of work at often equity laden, but cash poor jobs. This gives them liquidity to actually “have a life,” through the process. And second, it keeps the company charging hard without the pain incurred by the massive regulatory burden of being public, and showing perfect quarter on quarter growth.
Source: RP
