Good for them, with just a 500K investment I would guess the following 1. The founders should own at least 75% of not more which gives them a neat 30M in this

Good for them, with just a 500K investment I would guess the following 1. The founders should own at least 75% of not more which gives them a neat 30M in this deal. 2. As others pointed out, why such a poor multiple on revenue? The possibility is that they had a service heavy business (ie bulk of revenue came from service to customers). 3. From point 2, they mostly had negligible or no IP. If they had significant IP and sold for this multiple then it is a poorly made deal. 4. They raised only 500K, ie equity capital. There is no mention about their debt & other liabilities. This could be another reason for the low multiple. 5. Deal type is key, if it was cash it is good but if it was equity/options, then not so good. We closed our acquisition beginning of this year as follows: Value: 9.5M USD Type: Cash Revenue: ~1M USD Valuation: 10X Investment: 300k USD Debt/Liability: nil Status: Profitable Investor returns: 5X Location: India