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Mark Vadon
Zulily Chairman Mark Vadon at the 2014 GeekWire Summit

Zulily co-founders Mark Vadon and Darrell Cavens are poised to reap a huge windfall after the online retailer they started five years ago sells to home-shopping giant QVC for $2.4 billion.

In documents filed with the SEC, the company revealed that Zulily’s founders own 45 percent of the Seattle company’s shares. Vadon, who is the company’s chairman, owns roughly 35 million shares, and Cavens, who is the president and CEO, owns about 25 million shares.

Zulily CEO Darrell Cavens
Zulily CEO Darrell Cavens

On Monday, the Seattle online flash sales company announced it is being sold to Liberty Interactive’s QVC Group for $2.4 billion in cash and stock. Each share is valued at $18.75 each, making Vadon’s and Cavens’ stakes worth roughly $670 million and $470 million, respectively.

Those numbers are based on the executives’ current holdings disclosed today, including vested and unvested shares, and other third-party accounts for which they control. The deal includes both $9.375 in cash and 0.3098 in shares of the home shopping network.

Despite both seeing a big payday, the founders are not as fabulously rich as they once were on paper. When Zulily went public in November 2013, Vadon’s 35.4 million shares equated to $1.3 billion and Cavens stake was worth $941 million.

In other words, their fortunes have been nearly cut in half, and the billionaires have turned into millionaires. Of course, with this deal, the two stay in control of the company. Zulily will remain in Seattle; Cavens will remain President and CEO and Vadon will join the Liberty Interactive’s board.

The sale comes at a time when Zulily’s stock has sunk significantly, following a series of earnings misses and questions about the company’s long-term growth strategy. Ironically, an analyst had just been quoted as saying that he thought Zulily would become the next QVC, but “We didn’t realize Zulily would have this much trouble with the curve.”

Over the past year, shares of Zulily have been trading about 50 percent lower, and are off the all-time high of $68 per share set in February 2014.

Another big shareholder that will make a nice return on the sale is Chinese retailer Alibaba, which purchased a big block of Zulily stock in May for around $11 a share. It will reap about $215.6 million from the sale of its 11.5 million shares.

The vast majority of the company’s largest shareholders include big funds, like Fidelity (13.5%); Morgan Stanley (8.6%); and T.Rowe Price Associates (6.5%).

Based on the most recently available information, one of the company’s big investors, Andreessen Horowitz does not own a stake anymore, and Maveron, a Seattle-based VC, also appears to have been selling off a majority of its shares. It currently owns roughly 600,000 shares, which are worth an estimated $11.2 million.

Naturally, Zulily’s shares are skyrocketing today, and are up nearly 50 percent, or $5.94 a share, to $18.51, or slightly below the sale price. Liberty Interactive’s shares are down 1.6 percent, or 49 cents, to trade at $29.77 a share.

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