Bono hopes to drop his ‘worst investor’ status

The Edge and Bono hope to buck trend with their Dropbox deal, writes Stephen Rogers

ALMOST exactly two years ago, US online financial blog 24/7 Wall Street dubbed Bono “the worst investor in America”.

His investment company Elevation Partners had pumped millions into Palm, which was failing to make inroads in the smartphone market and had, according to 24/7 Wall Street, “burned through large amounts of money” in the process. HP finally acquired Palm on July 1, 2010, yielding a return of just 1.5% for Elevation.

With hindsight, one might say Bono and his fellow investors simply had not, to quote the U2 lyrics, “found what they were looking for”.

Bono and bandmate The Edge were yesterday named as individual investors in cloud-computing firm Dropbox.

Dropbox allows its 50m users to store documents, photos, and video in the cloud with the first 2gb free.

One might speculate that Bono had the inside track on how successful Dropbox could be.

Last November, Forbes described it as “tech’s hottest start-up”. That would be the same Forbes in which Elevation Partners is a minority shareholder.

The Dropbox investment is just the latest by Elevation in cutting edge social media sites. Its most high-profile was in Facebook.

It spent €90m on a 1% stake in Facebook in 2011 to add to the €68m it had invested in Nov 2009. That brought its total share in the site to 1.5%. Its stake is now estimated at a value of up to €800m.

The other notable success the investment firm has had is in Yelp.

The team invested just over €70m between Feb and Apr 2010 in the business reviews website. On its first day on the markets last month, the company’s shares shot up by 60% in value, meaning the Elevation investment was worth up to almost €190m.

Elevation was founded in 2004 by Fred Anderson, a former chief financial officer of Apple, and Roger McNamee, co-founder of Silver Lake Partners, which has invested in Skype in the past. Bono joined as a partner just after its launch.

On its website it lists and pictures its five main investors, the three original men along with Brett Pearlman, a former senior managing director of the Blackstone Group, and Avie Tevanian, a former chief software technology officer at Apple.

Its site states that “Elevation’s mission is to help new media and technology companies capitalise on technology disruption and build large-scale, highly valuable businesses” — presumably while netting a small fortune for itself.

Last month, Bloomberg reported that Elevation was seeking $1bn (€750m) for its next buyout fund. It said the company was raising money after a near seven-year hiatus from the market. It added that Elevation collected $1.8bn for its last fund in 2005. That fund had yielded a return of 11.1% as of Sept 2011. That return will have grown significantly with the successes of the Facebook and Yelp investments.

While Bono’s investment portfolio is paying dividends, the day job is also still proving as lucrative as ever. U2’s latest 360° tour grossed over $703m after 7m rock fans paid to see the band over the past three years. The Sunday Times’ richlist last year said the band had an accumulated wealth of almost €506m.

Despite this, however, Bono and the band continue to avoid paying tax in this country, for which they have long been criticised, especially since the economic downturn.