To a hacker trying to get a complex project off the ground on pocket money, $8 million sounds like a fantastic sums, but there are many circles in which investing this amount of money in people you're connected to is trivial, regardless of market mood. It's not even necessarily the case that this is bad investment. If the investors believe, for whatever reason, in the company's executive team, it's probably because they are counting on them to somehow grow the company into a viable business. Many such companies, for example, will be spun into consulting, services or b2b companies you'll never read about on techcrunch, but which at the very least make a modest return on their investment. The fact that Qwiki is very unlikely to become the next huge internet phenomenon doesn't mean that it's a bad investment - it only has to not die and grow into a business worth more than its current valuation.