
Parakey: Did Investors Get Left Out In The Cold? - luccastera
http://www.techcrunch.com/2007/09/25/parakey-did-investors-get-left-out-in-the-cold/
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karzeem
Doubling your investment in six months is pretty good, but VCs would much
rather wait three or four years and get 20 times their investment. Since it's
a minority of companies that turn a profit for their investors, a Parakey-
scale success is not the kind of thing that VCs dream about. $4 million is
probably less than Sequoia invests in most of its companies, so it's certainly
less than they're hoping to get out. If they turned a $2 million profit,
that's a piddling 1% return for a $200 million fund.

This is a really interesting case of founders turning the tables on VCs. When
there's a lop-sided outcome, it's usually, from what I gather, the VCs who
come out on top. I wonder how much of the uniqueness of this had to do with
Blake and Joe's high profile (and their presumably resultant ability to get
unusually favorable terms from investors).

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aston
Parakey had an incredible number of people involved in their angel round. I'm
sure almost no one had a substantial (money-wise) investment in these guys.
The early exit was probably somewhat disappointing relative to what could've
been a huge late exit, but you can't be too sad doubling up that fast.

In other news, Facebook has $4million in cash to hire two people with??

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rms
Edit: I needed to reread the article.

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pg
Reread the article.

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rms
OK, I get it. All the cash compensation went to the investors.

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augy
PG: as an investor, how do you feel about this?

