Two years after a $7.75 billion valuation, Hopin's core business sold for $15 million upfront. What survived was a product it had bought

The core business of a $7.75 billion company sold for $15 million upfront.

Virtual-events platform Hopin raised $450 million in its Series D in August 2021 at a valuation of $7.75 billion. Two years later, on July 31, 2023, communications company RingCentral bought the technology and customers of Hopin’s events business. RingCentral’s quarterly report to securities regulators gives the consideration as $15 million upfront, plus up to $35 million more depending on performance targets.

On the upfront payment alone, that is about one five-hundredth of the valuation. And what Hopin kept after the sale was stranger still. Most of the company’s revenue came not from the events product Hopin built itself, but from StreamYard, a streaming tool it had bought for $250 million.

Hopin raised about $1 billion in venture capital, which puts it outside this site’s criteria for cases, which record businesses that started small. Here, as a column, the buyer’s disclosure and reported figures are used to read how the valuation, the core business and the revenue base drifted apart.

From the Series C to the sale of the events business

Tech.eu and Skift both put total funding at about $1 billion, or over $1 billion.

In five months, the valuation rose $2.1 billion

In its March 2021 Series C, Hopin raised $400 million at a $5.65 billion valuation. Five months later, in August, it raised $450 million at $7.75 billion. In under half a year the valuation rose $2.1 billion.

Tech.eu called Hopin a “pandemic-era unicorn.” When people could not gather, tools that moved whole events online were needed. Money came in on the premise that the demand would last, and the company hired. According to Skift, staff peaked at about 1,200.

The same pandemic demand also flowed into much smaller businesses. WFH Advisor, a remote-work information site started by three people as a pandemic side project, sold for 34 times monthly revenue. The small site riding the trend sold in the middle of it. Hopin, in the middle of the trend, took in money at a valuation premised on the trend. On the same wave, the timing of the exits ran in opposite directions.

A core business without a solid revenue stream

In 2022, demand for online events shrank. Hopin cut 12% of staff in February and 29% in July.

Skift wrote that Hopin lacked a solid revenue stream, particularly from its core virtual-events platform. In the August 2023 sale, that very core was what left. RingCentral acquired the technology assets and customer relationships of the events platform and a product called Session, not Hopin the company.

The buyer’s own estimate says something about what it got. RingCentral’s CFO said the acquisition was expected to have an immaterial impact on revenue and expenses in 2023. The core business of a $7.75 billion company had become too small to move the buyer’s results.

The product it bought outlasted the product it built

After the sale, Hopin kept StreamYard and Streamable. According to Skift, those two made up most of the company’s revenue. StreamYard was the largest of Hopin’s six acquisitions, at $250 million according to Tech.eu.

Side by side, the numbers point the opposite way. A streaming tool bought for $250 million remained the pillar of revenue to the end. The core business Hopin built itself, which carried a $7.75 billion valuation, left for $15 million upfront.

The desk sees the heart of this failure here. What pushed the valuation up was the expectation that Hopin’s own events product would become the standard for online events. What actually supported revenue was streaming, a narrower and more everyday demand. Where the two products ended up shows which demand outlived the pandemic.

What follows is inference: buying StreamYard turned out to be the most solid asset this company ever held. It may not have saved the company, but after the core business that explained most of the valuation was gone, that purchase seems to be what let Hopin remain independent.

The upfront payment and the conditional extra

There is also something to read in how the price was structured. RingCentral’s quarterly report splits the consideration into $15 million upfront and up to $35 million tied to specified performance targets. Headlines led with the $50 million maximum, but only $15 million was certain.

The less confident a buyer is in a business, the more the price shifts to conditional later payments. If targets are missed, the buyer pays nothing more. That over two-thirds of the maximum was conditional shows the buyer believed in this business’s prospects less than the seller did.

The numbers that are not written

The limits need stating. Hopin’s revenue for any year does not appear in the sources read. How much of the conditional $35 million was actually paid was not checked. Total funding is the reported “about $1 billion,” not a sum checked round by round. Headcount and layoff percentages come from Skift’s reporting. The statement that StreamYard and Streamable made up most of revenue also comes without a percentage. No retrospective by the founder could be found in the sources read.

For a companion read, there is the previous day’s column on Pebble, a company that turned down $740 million and sold for under $40 million, where what sold in the end was not hardware but software and people.

The product the valuation pointed to and the product revenue pointed to were different

Hopin’s $7.75 billion was a price on the future of online events. The core business that was supposed to carry that future was let go two years later for $15 million upfront.

What carried the company’s revenue to the end was not a product it built but a streaming tool it bought for $250 million. The product the valuation pointed to and the product revenue pointed to were different things from the start.