>an option to make a lot of money in case of a big future success.
That's why they gave Baremetrics $800k 5 years ago. Why they are giving the founder $800k today is far less clear.
They invested $800K in Baremetrics.
> Why they are giving the founder $800k today is far less clear.
They aren't. They are just writing off their initial investment.
They lose $800K (which is less than that because it can be offset for tax purposes), not $1.6M.
There was only ever one $800k "given". You're making it sound like "today" they went all in on $1.6mil in total. That isn't what happened.
Re:I sold Baremetrics
by jbverschoor on Tuesday November 10, 2020 @03:39PM
(#25051597)
If they had a 20% stake, it would be 200x. Not 1000
ummmm ....
If company grows 1,000 times, their stake also grows 1,000 times
Re:I sold Baremetrics
by jbverschoor on Wednesday November 11, 2020 @03:38PM
(#25062705)
The company wasn't valued at 800k.
Every VC investment is a speculative bet on the future success of the company.
If Baremetrics sold for $800 million, they would have made 1000x their money.
If it was their only investment, then it would be a major fail but VC business model works by making 100 bets. Few bets deliver 1000x return but many of them are 100% loss.
The VC knew what they were doing and their $800k got them exactly what they paid for: an option to make a lot of money in case of a big future success.