Photobox, which prints digital photos and books, announced that it was purchasing Moonpig — which sells personalized greetings cards online — in a deal funded through a mixture of cash, shares and borrowed money. The Financial Times has plenty of detail about the transaction.
The two are known to have been circling each other for a while, but Photobox CEO Stan Laurent suggested that the deal was about trying to become the biggest player globally in what he called the “personal publishing market”. However the timing, just a few days after greeting cards retailer Cardfactory bought online gift business Getting Personal, makes it look like a wave of consolidation is starting to hit the wider online printing business in the U.K.
It’s a large sector with several significant players and no runaway winners right now. Precisely what it means for local stalwarts like Moo.com, or international companies with big British presence like Dutch company Vistaprint, remains to be seen. Similarly, it’s not clear whether this will have an impact on American rivals like Snapfish, Zazzle and Shutterfly, though there’s certainly the possibility that it could help ignite similar consolidation on the other side of the Atlantic over the next year or two.
Photobox, which is backed by Highland Capital Partners (Ask Jeeves, eToys) and Index Ventures (Skype, MySQL), says it will be raising another round of funding off the back of the deal. It has previously suggested it might consider flotation.
In the long run, though, this deal may actually have more cultural impact than it does to the market. After all, the purchase is a testament to perseverance: the story of two dotcom veterans who many thought wouldn’t stay the course. Moonpig was started in 1999, as the dotcom bubble was hitting full speed. Even the name itself seemed to be meaningless, plucked from the Web 1.0 handbook (it was actually based on founder Nick Jenkins’ nickname).
Photobox came a year later, hoping to build a business that would help keep the humble physical photograph alive. Both made it through the crash and the desolate years afterwards and recovered well, building substantial and valuable businesses over time.
In fact, in a way they’re also indicative of a certain style of European startup: one that just keeps on going and going. Moonpig founder Jenkins was forced to take six rounds of investment to push the company to profitability — but at each point he put his own money in as well to prove to investors that he was serious. The business didn’t turn a profit for five years, but when it did things grew pretty quickly. And the result of Jenkins’ dedication, says the Financial Times report, is that he retains 35 percent of the company even after all this time, and gets a substantial reward of almost $70 million for his efforts.
Photograph used under Creative Commons license courtesy of Flickr user lollyknit