How do you guys think this actually works in a sense of equity? Google Ventures gets a stake in Firespotter. What happens if they spin-off one of their ideas into a new company? I take it Google Ventures is still involved then, right? Why invest otherwise?
That doesn't resolve my concern. It actually makes things even shadier in my mind since Google Ventures was just one of many backers. A cynical mind might view this move as simultaneously acquiring the tech talent behind a startup, laying off any non-essential staff that wouldn't be attractive to acquire, freezing out all the other investors who had money in the company, and ducking the lawsuits that the previous company was involved in.
Maybe this just looked like a good idea to Google at the time. Sometimes you have to make acquisitions to look progressive to your shareholders. Now, I'm betting they're glad they didn't make this purchase.
Is this not in direct competition with their "hire-by-acquisition" model? Generally, Google acquires companies early on for a price that is favorable to the founders, but wouldn't be favorable to any institutional VC since it wouldn't "move the needle" enough. If Google Ventures invests, then this means that they'd be hesitant to sell for a founder-friendly price to google itself.
Then again, maybe companies that say no to an early stage acquisition, are prime candidates for investment. Something that was impossible before Google Ventures.
They have substantial revenue, so not taking much investment isn't surprising. I just wonder what the thought process was in deciding to sell to Google at this price.
This must still be a huge win for the founders. They probably still had most of the equity since they only took one round of financing, and at a point when the company was already mature.
The only reason not to sell is because you believe Google can't break your business before you get a better offer or you can IPO. If you think they can do that then you don't really have much of a choice.
Founders tend to factor this in to their thinking from the start. "Acquired by Google" is often considered a desirable exit goal.
I don't really understand why people get so mad when being acquired by Google. For me it doesn't make any sense to sell your company, even worse if it's to Google.
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