

Investors Don't Like Acqui-hires - transburgh
http://uncrunched.com/2012/08/26/investors-dont-like-acqui-hires/

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Sambdala
This is pretty obvious right?

All of the comments on the pandodaily article revolved around the fact that VC
doesn't get their homerun payday during an acqui-hire.

It seems like the discussion around acqui-hires revolves around what the
commenter's personal interests are for the most part.

However, it makes sense that the acqui-hire would become more prevalent for a
couple reasons. There are many more startups being created, both increasing
the supply of startups to acqui-hire and decreasing the %age of startups that
exit in a home run. Also, the market price for developers is going up, and
seeing someone execute and deliver a product in a product vertical you want to
execute in makes you worth a large multiple of an unknown and/or average
developer.

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benologist
Investors who don't want their startups to accept an acqui-hire already have
all the protection they need: make a better offer.

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tptacek
No. The logic employed here is the same logic that underpins liquidation
preferences. If investors don't want to fund acqui-hire outcomes, they do in
fact have more tools than a counteroffer.

The best operators are always going to get the best terms, but an industry-
wide concern over acqui-hires could easily manifest itself in poorer terms for
everyone else.

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benologist
Presumably these acquisitions happen most of the time because the startup
failed, this is the situation I was alluding to where they can just double
down if they think they / the startup can do better but otherwise nothing is
going to make this look like they picked Instagram.

If they're trying to protect against people who quit too easily or aim too low
then they made the wrong bet, they're not going to avoid this if they
predefine a price or terms where it's a very mediocre OK.

