[abat]

tl;dr Acqui-hires are are turning into just hires. Companies just want the talent from failed start ups. The acquirer lowballs cost of buying out equity and but keeps high retention comp to employees. In short term this is good for start up employees, but writer argues this will hurt seed ecosystem because investors don't like being burned.

[001sky]

And to follow on, what was a specifically interesting:

Reports that the premium was less that 1/3 salary per FTE being offered by the "Acquirer".

That is, these so-called "M&A deals" were valued at <less than> a mass-head-hunting contract.

(That being said, the submitted article reads more like an OP-ED than a more mainstream piece of journalism.)

[unreal37]

It's techcrunch, not journalism.

[001sky]

Author is not a TC staff-writer / employee

[suyash]

they don't get burned, they still make a return on their investment just not 10X or 100x or more that they would otherwise get for example in an IPO.

[unreal37]

They lost 90% of their investment. Not what people usually call "a return".

[pkaye]

VC investment don't guarantee a return. The market has decided that the company is worth little.

[mkal_tsr]

Maybe VCs should be more selective about who they give their money to. I'll get downvoted for this, but it seems 90% of funded start-ups don't deserve the mass funding they deserve (a portion of it sure, but the hundreds of thousands to hundreds of millions in VC $? no).

[objclxt]

You are making an assumption that VCs believe all their investments will turn a profit, which in most cases isn't true. You invest in fifty startups, twenty lose money, twenty break even, ten make stonking, huge amounts of profit that cancel out your losses and leave you with a nice pile of cash left over.

You're right: 90% of funded start-ups probably don't deserve the money, and will fail to produce any return at all. That's part of the game. It is not always clear what exactly will make you billions until after it's big.

[mkal_tsr]

Oh for sure, there's definitely a market for the ones you know will fail ... but I'm one of those "take calculated risks instead of just risks". Of those 20 that failed, I wouldn't be surprised if you could have guessed 10 would have failed, and of those 10 making it strong, maybe guess 2-3 would have done well, with everything else up in the air (luck, market, timing, and a billion other factors you couldn't see) ... but even then, I would ask the person managing the fund, "why would you invest in those 10 you knew would fail?". I guess for my, I'm more aligned to the "directed funding" rather than a more "spray-and-pray" approach.

But then again, I don't invest in start-ups so my opinions and any advice should be taken with a huge grain of salt - my forte is software engineering, not finance and investing ;-)

To those downvoting, please explain your reasoning. I can't learn why my opinion is wrong with a simple downvote and no feedback.