Since When Is 3x a Good VC Return?
Maybe the VC model is broken after all. The VCs who backed hot digital video recorder maker Pure Digital Technologies Inc. have agreed to sell the company to Cisco Systems for $590 million in stock. At first, it sounds like a pretty good deal, but you have to understand that the VCs put $95 million into Pure, which makes the Flip digital video camera. Assuming they own half of the company, that’s a return of just over 3x their money. For a middle-of-the road VC firm, that would be a decent return, but for big name backers Benchmark Capital and Sequoia Captial that’s pretty much a dud.
19 March 2009•1 min read
