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I appreciate you sharing your experience, this is something we founders are not enough prepared to go through. Two comments IMHO: - Would you have said yes an

by ar7hur 12y ago

I appreciate you sharing your experience, this is something we founders are not enough prepared to go through. Two comments IMHO: - Would you have said yes and looked into the details of their offer, you would have realized that the $12M are not upfront. Through retention packages and revesting, most of the price is typically paid over 3 or 4 years. So the offer was probably less attractive than it initially looks. - $12M is never a good outcome for investors (at least big angels and VCs). They make their returns only on big exits.

jf22 12y ago
>They make their returns only on big exits. Don't they make returns anytime their money invested is less than the money gained from the sale?
- mhartl 12y ago
  In a narrow sense, yes, but virtually all investor returns typically come from a few big winners. For example, although many Y Combinator startups have achieved great success, most of YC's returns come from just three companies: Airbnb, Stripe, and Dropbox. If all an investor's winning startups exited at the ~$10m level, their returns would be anemic at best, and would quite possibly be negative after factoring in losses from failed companies. I think that's what the grandparent comment was getting at.
  - psykovsky 12y ago
    And let's be honest, AirBnB will go the way of Uber, regulated out of existance. I honestly don't know why it didn't happened yet, for both.
    - no_future 12y ago
      They're both multibillion dollar backed companies, so more likely the opposite will be true: any regulation against them will be lobbied out of existence.
      - psykovsky 12y ago
        Please...
- sumedh 12y ago
  Not exactly. There will be couple of other companies in their portfolio which would shut down and the VCs would lose all their money. So they really need a big exit which would make up for all the other losses.
mattzito 12y ago
> Through retention packages and revesting, most of the price is typically paid over 3 or 4 years. I'd be very careful with "Typically". It's not at all uncommon for acquirers to write a check, and then tack on retention packages for key employees. They very easily could have intended a $12m cash buyout, with another $2m for retention, spread over the team.

by ar7hur 12y ago

jf22 12y ago

>They make their returns only on big exits. Don't they make returns anytime their money invested is less than the money gained from the sale?

mhartl 12y ago
In a narrow sense, yes, but virtually all investor returns typically come from a few big winners. For example, although many Y Combinator startups have achieved great success, most of YC's returns come from just three companies: Airbnb, Stripe, and Dropbox. If all an investor's winning startups exited at the ~$10m level, their returns would be anemic at best, and would quite possibly be negative after factoring in losses from failed companies. I think that's what the grandparent comment was getting at.
- psykovsky 12y ago
  And let's be honest, AirBnB will go the way of Uber, regulated out of existance. I honestly don't know why it didn't happened yet, for both.
  - no_future 12y ago
    They're both multibillion dollar backed companies, so more likely the opposite will be true: any regulation against them will be lobbied out of existence.
    - psykovsky 12y ago
      Please...
sumedh 12y ago
Not exactly. There will be couple of other companies in their portfolio which would shut down and the VCs would lose all their money. So they really need a big exit which would make up for all the other losses.

mattzito 12y ago

> Through retention packages and revesting, most of the price is typically paid over 3 or 4 years. I'd be very careful with "Typically". It's not at all uncommon for acquirers to write a check, and then tack on retention packages for key employees. They very easily could have intended a $12m cash buyout, with another $2m for retention, spread over the team.