The Forbes-Valued Investment of Andreas von Bechtolsheim in Google: An Analysis of Shares and Value

Andreas von Bechtolsheim, a key figure in the early days of Google, made a significant investment in 1998. This investment, amounting to $100,000, resulted in him receiving 1.2 million shares in return. This article will delve into the details of this investment and its value over time.

Investment and Return: 1998

In 1998, Andreas von Bechtolsheim invested $100,000 in the embryonic stages of Google. According to Mark's research, this investment was part of the early venture capital rounds. The company was in its formative stages, and the investment was made at a time when Google had not yet gone public.

Given today's standards, this venture would fall into the Seed or even pre-Seed category. The details of this round can be found in Google's S-1 filing. The Series A/A-1 round was post-split, with 30,720,000 shares issued for a total liquidation preference of $1.92 million at a 2x valuation. The total investment in this round was $960,000 from investors including Andy Bechtolsheim, Ram Shriram, Jeff Bezos, and others.

Subsequent Rounds and IPO

Between the Series A/A-1 round and the IPO, Google completed another round of funding, raising $41.7 million at a valuation of $50 million. This round was led by Kleiner Perkins and Sequoia Capital, which collectively held 24 million shares each, representing approximately 9% of the company post-IPO.

For a $100,000 investment, the shares acquired by Bechtolsheim would have been proportionally significant, but not as large as those of Ram Shriram. According to available information, Ram Shriram had 5.3 million shares at Google's IPO. Therefore, Bechtolsheim's share count would have been between 2.6 and 5.3 million at the IPO, suggesting his stake was somewhere between half to the same proportion as Ram Shriram's, including shares sold to the public.

Value at IPO and beyond

On March 10, 2010, Forbes estimated the value of Bechtolsheim's original Google investment at $1.7 billion. This estimation was based on Google's closing share price of $576.45 on that day. To determine the number of shares this corresponds to, we can use the formula:

Number of Shares Investment Value / Share Price

Substituting the values, we get:

Number of Shares $1,700,000,000 / $576.45 ≈ 2,950,450 shares

This figure is in line with our previous estimates, indicating that the 1.2 million shares Bechtolsheim held at the IPO would have been worth $927,410,000 (1.2 million shares * $85 per share). After accounting for taxes and other factors, this leaves an excellent return on his $100,000 investment.

Conclusion and Analysis

Andreas von Bechtolsheim's initial investment of $100,000 in 1998 resulted in an impressive and growing holdings of 1.2 million shares at Google's IPO. The valuation of his original investment, as estimated by Forbes, further underlines the significant success of this venture. The details and proportions of the shares further support the original investment of $100,000 being converted into nearly 1.3 million shares, which grew in value by orders of magnitude.

The case of Andreas von Bechtolsheim serves as a compelling illustration of the transformative potential of early-stage investments in technology startups. Bechtolsheim's story is not just one of financial success, but also of aligning with the right concepts and investors at the right time.