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According to crunchbase digg has taken $40M in funding. A multiple of less then 2 on the investment doesn't seem to be the kind of deals to get VC's excited. A
by mikeryan 16y ago
According to crunchbase digg has taken $40M in funding. A multiple of less then 2 on the investment doesn't seem to be the kind of deals to get VC's excited.
At the time there was really no reason to not try to hold out for an extra $40M or so.
Of course Kevin wanted to take it he's walking away with a significant amount of that $80M in his pocket.
Heh it makes the Reddit deal ($100k in and sold for $20M) look effing brilliant - and with the uptick in traffic its getting from digg v4 its making that look like the much smarter play.
- points 16y agoAgreed @ Reddit. Maybe a winning formula. 1. Find a startup in a new area that is over funded (digg) 2. Copy it, on the cheap. 3. Get bought for a "cheap" price compared with what the over funded startup would request.
- tptacek 16y agoThis happens all the time in enterprise security.
- pkaler 16y agoIt wouldn't work in this case. Digg did a Round C in 2008 of $28.7m. That's when they were over funded. Reddit was founded in 2005. Digg was founded in 2004 and did a Round A at a reasonable $2.8m in late 2005. http://www.crunchbase.com/company/digg http://www.crunchbase.com/company/digg http://www.crunchbase.com/company/reddit http://www.crunchbase.com/company/reddit The only way your plan would work in this case is if you have a crystal ball in 2005. Basically, your competitor bets after the flop and you're planning on playing the hand while short stacked. And on the flip side you may end up being the Jaiku or Pownce to someone else's Twitter.
- ahi 16y agoBad example. Jaiku was bought by Google. Twitter keeps getting VC money, but hasn't gone liquid/profitable yet.
- dekz 16y ago2.5 grow Kind of important
- points 16y ago2.4 Decide to have absolutely no advertising and no monetization strategy whatsoever, leading to inevitable growth. ;)
- sfrench 16y agoPer Crunchbase Digg has taken 3 rounds of funding. Depending on when the offer in question happened, Digg may have only been at 2.8M or 11.3M in funding.
- ojbyrne 16y agoOver half of that $40 million is Series C. I'm pretty sure the offer he is talking about actually came before the series B, so there was around $5 million invested.
- tlrobinson 16y agoWith $40 million in funding a $80 million exit would barely repay the investors (they would break even if they owned 50% of the company, right? notwithstanding >1x liquidation preference, of course)