Why It Sucks To Be A VC
Online restaurant reservation service OpenTable has set the terms for its IPO—and they don’t look wonderful for its venture backers (see table after the jump). As a group, VCs invested a total of close to $69 million in the company, but at $13 each their shares would be worth a combined $162 million following the IPO. That means the VCs would have collectively earned a return of just 2.36x on their investment (were they to cash out at the IPO price). The only VC that stands to earn a decent return is Benchmark Capital. It invested an estimated $12.7 million over two rounds (according to data from peHUB publisher Thomson Reuters). With 5.3 million shares that would be valued at $68.8 million, Benchmark is looking at a potential multiple of 5.4x. Still, that’s not great for nine years of work.
