Lance Armstrong Foundation Collects $3.1 Million in IPO

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January 26, 2011; Source: American-Statesman | A healthier stock market is paying dividends for the Austin-based Lance Armstrong Foundation. The foundation netted $3.1 million from the sale of shares it held in Demand Media, a high tech company that went public on Wednesday.

The foundation sold some 115,000 of its own shares, and 68,000 shares that founder Lance Armstrong had donated. The foundation received $17 a share – a higher than expected price – when it sold its holdings to institutional investors on Tuesday night ahead of the public offering. Shares closed on Wednesday at $22.65, up 33 percent.

Foundation officials will likely be keeping an eye on the share price, as it holds another 68,000 shares that it can sell later. The foundation received warrants to buy shares in Demand under a 2008 licensing deal that allowed the web media company to use the Livestrong name and brand to create, a for-profit health and fitness website.

Even before the opportunity to sell its shares, the deal with Demand proved lucrative for the foundation. "This was a very valuable way for a nonprofit organization to have their brand and name and image and likeness promoted in a very innovative way," said Greg Lee, the foundation's chief financial officer. The foundation, whose mission is to "fight to improve the lives of people affected by cancer," also benefits from other licensing deals with Nike, Bayer Aspirin, Trek bicycles, Oakley sunglasses and RadioShack.

According to the Austin-American Statesman, revenues from those agreements provide about 25 percent of the foundation's annual revenue, which was $48 million last year. The foundation's website reports that it "had functional expenses totaling $37,147, 929, and 81 percent of every dollar raised went directly to fund programmatic expenses."—Bruce Trachtenberg