It Looks Like Snapchat Paid $15 Million To Buy A Google Glass-Like Startup
Epiphany EyewearSnapchat secretly acquired a company working on a Google Glass type of product earlier this year, according to documents that leaked as a part of the Sony hacking.
Sony Entertainment CEO Michael Lynton's inbox has been exposed by hackers. In it, we see deal terms that suggest Snapchat paying $15 million for Vergence Labs, which makes frames for glasses. The terms say Snapchat paid $11 million in cash, and $4 million in stock.
Vergence Labs' website makes no mention of being owned by Snapchat. However, a source tells us that Snapchat has in fact bought Vergence. We've reached out to Vergence for comment.
This is a strange acquisition since Snapchat makes an app for sharing photos and messaging. Its photos quickly disappear. Perhaps it has good technology for converting video files. Perhaps it has talented engineers.
Vergence Labs main product is Epiphany Eyewear, a product that subtly records video with the press of a button on the side of the frame. The glasses come with 8 GB, 16 GB or 32 GB of storage. Depending on which pair you get, you'll spend $300 to $500. The glasses hook into a computer and you upload the video to an online account. You can't take photos with the device, but Epiphany has software that you can use to capture stills from the videos you upload.
Erick Miller and John Rodriguez co-founded the company in 2011, before Google Glass was announced. Miller worked on the idea as a graduate student at UCLA and poured his life savings into building the product. You can find a review of Epiphany Eyewear here.
Vergence may have been low on money, because in another email just days before the deal was sent around, another email showed Snapchat loaning it $2 million.
Here, from the emails, are the terms of the deal:
> [cid:firstname.lastname@example.org]ACTION BY UNANIMOUS CONSENT
> VIA ELECTRONIC TRANSMISSION
> OF THE BOARD OF DIRECTORS
> Snapchat, INC.
> The undersigned, constituting all of the members of the Board of Directors (the "Board") of Snapchat, Inc., a Delaware corporation (the "Company"), pursuant to Section 141(f) of the Delaware General Corporation Law and the Company's bylaws (the "Bylaws"), hereby adopt the following resolutions by unanimous consent via electronic transmission:
> Approval of Stock Purchase Agreement
> Whereas, the Board has reviewed the proposed Stock Purchase Agreement (the "Stock Purchase Agreement"), among the Company, Vergence Labs, Inc. (the "Target"), the stockholders of Target and Erick Miller as the stockholders' agent, in substantially the form of Exhibit A hereto, pursuant to which the Company would acquire all the shares of Target and Target will become a wholly-owned subsidiary of the Company (the "Transaction");
> Whereas, the Board has discussed a proposal to acquire Target through the Transaction in exchange for an aggregate purchase price of up to $15,000,000 in cash that will be paid to Buyer in two separate payments, where the first of such payments will be paid to Buyer at the closing (the "Closing") in an amount equal to $11,000,000 in cash, less (i) the Company's transaction expenses and (ii) the amount required to repay that certain loan paid prior to the signing of the Transaction (the "Buyer Loan") and the second of such payments in an amount equal to $4,000,000 in cash that will be held back at the Closing (the "Holdback Amount") and be subject to monthly vesting over 24 months based on the continued employment of the stockholders with the Buyer pursuant to the terms set forth in the Stock Purchase Agreement (the "Purchase Price");
> Whereas, based on its review of all relevant factors, including, without limitation, the terms of the Stock Purchase Agreement and related agreements, the Board believes that the Stock Purchase Agreement and related agreements are advisable to, and in the best interests of, the Company and the Company's stockholders.
> Now, Therefore, Be It Resolved, that the Stock Purchase Agreement, as described to and in substantially the form presented to the Board, with such changes as the officers of the Company may approve, be, and it hereby is, authorized and approved;
> Resolved Further, that the officers of the Company be, and each of them hereby is, authorized and directed to continue to negotiate, and to execute and deliver on behalf of the Company, the Stock Purchase Agreement, the related agreements and any other agreements, certificates and documents any of such officers deems to be necessary or appropriate in connection with the contemplated Transaction (the Stock Purchase Agreement, the related agreements and any other agreements, certificates and documents that any of such officers deems to be necessary or appropriate in connection with the Transaction being referred to as the "Transactional Documents"), and to cause the Company to perform its obligations under the Transactional Documents;
> Resolved Further, that the officers of the Company be, and each of them hereby is, authorized and directed to take all other actions they may deem necessary or advisable to carry out the intent and accomplish the purposes of these resolutions; and
> Resolved Further, that all prior actions taken by the officers of the Company with respect to the preparation and negotiation of the Transactional Documents and otherwise in connection with effecting the purposes and intent of the Transactional Documents be, and each of them hereby is, authorized, ratified and approved.
> Ancillary Powers
> Resolved, that the officers of the Company be, and each of them hereby is, authorized and directed to take such actions and to execute all such documents that any of such officers deems to be necessary or appropriate to carry out the purposes of the foregoing resolutions; and
> Resolved Further, that the authority given in these resolutions is retroactive and any and all acts performed before the passage of these resolutions in connection with the Stock Purchase Agreement, the related agreements and the transactions contemplated thereby, or set forth in these resolutions, are hereby ratified and affirmed.
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