$111M exit on $35M. Seems meh for seven years effort. Were prospects cloudy? Better return over seven years for most employees (possibly even founders) working up through a FAANG. I’m sure YC did great, of course.
$35 million is how much they raised. If they were purchased for $111 million that means that after the investors are paid off their principal there is $76 million left. There are 70 employees, the original investors probably made some profit on their initial investment, so split that remaining $76 million among everyone and none of the employees left super rich from this deal except maybe the founders.
It's kind of like going to vegas for a week and coming out with a lot of good stories and 90% of your money.
In terms of investor return, I think it's healthy to have some exits like this. A bunch of the money was only in for 2 years, and probably doubled their investment in that time. The rest of the investors got their money back, with something close to NASDAQ returns on top of it. If this was the baseline for the fund instead of going to zero, you wouldn't need unicorns and the questionable growth tactics that go with them.
If founders had 25%, they got "retirement with reasonable luxuries" or "gunpowder to play investor" money of double digit $millions.
If 20-25 employees split an option pool of 15%, it's close to replacing the FAANG opportunity cost.
So totally agree that it's a bit of a "meh" outcome in comparison to financial alternatives, and the pie splitting matters a lot. But it didn't go to zero, and everyone is within a stone's throw of their stock market / FAANG hurdle rates (and it's not like that FAANG career is guaranteed for people who thrive better at startups). And the stories and experiences are a hell of a lot better.
Without insider knowledge of the transaction, it is impossible to say what the returns were for various tranches of investment or for the founders or employees.
What is $35M here? Also, YC2015 would make it about 8 years run in 2023.
I think exit is timely because there's the dire possibility of fading AI/LLM hype that's where GPU demand would fall off the cliff not only on the server side but also that many devices might have better inference hardware.
35m is what Paperspace raised according to crunchbase. 12 of which was raised in 2021, before the AI hype. So unless their valuation was absurd I think all investors did OK here.