[eanzenberg]

That's actually not a bad return on investment (7.5% yearly)

[inuhj]

It's not a good return on investment because the underlying asset hasn't appreciated 7.5%/yr some 8 years later. I am not a valuation expert but as a small business I'd estimate a 3x EBITDA placing the valuation at 2.34MM. The investors presumably owned a fraction of that.

[nostrademons]

There's a time value on that money. If you'd put $10M into an S&P 500 index fund in 2011, it'd be worth about $22M now, which first of all is a fair bit more than 7.5% and secondly is the denominator you're looking for to figure out percentage returns on capital now. The company wasn't making $780K/year in profit in 2011, it took 7 years to get there.

[eanzenberg]

That's timing though, historically I believe s&p yields 7% per year on average.

[cecilpl2]

Assuming reinvested dividends, the S&P has returned 7% real, or 10% nominal over its lifetime.

[umeshunni]

And the return on venture capital during those slow periods are also presumably lower (due to recessions etc)

[jeremyjh]

Risk adjusted its a pretty poor return. Also you are completely ignoring the time value of money.

[Aeolun]

And it doesn’t stop there. The money certainly isn’t vaporized as with a failed business.