Startups That Rejected $100M Offers

What an astounding lack of mathematical understanding.<p>First, if you raise $36M, getting acquired for $100M could very well mean next to nothing for common stock holders.<p>The odds of a venture-backed startup failing may be 75%, but the odds of a company that's looking at a $100M offer failing are probably more like 10% for real "failure", a high likelihood of not quite being able to match that offer later, and a good chance of a higher exit at some point in the future.<p>"99.99% of entrepreneurs" include all those companies that never get the first customer, and never get a buyout offer. I can think of a handful of companies that have been successful after turning down an offer. So now I challenge the author of this piece to come up with the tens of thousands of companies he implies got a buyout offer, turned it down and regretted it.

Once you reach a certain point money simply doesn't matter. They mentioned Groupon: Andrew Mason knew that whatever happened he was never going to have to worry about money again. When you have that luxury, you go with your heart, and it usually isn't with the money. Even after he was fired he made out like a bandit.<p>The same thing goes for a lot of these founders. When you get a substantial buyout offer, you've done something very few people have. Even if you blow it, odds are someone else will fund your next startup. Either way you probably won't have to worry about money. Once a startup is funded, the founder isn't rich but the company usually pays the bills so he can focus squarely on work.<p>I don't think we should reject the allure of money, it goes against human nature. But the ultimate motivation is freedom. That's what money gives you; freedom to do what you love. If what you love is building a startup the money becomes insignificant, but having enough to let you pursue your passion comfortably is very important.

Money is just money. It can be squandered, mal-invested, taxed, or simply inflated away. However, the guts that all of those founders showed will forever be a reference point for their careers. Many can claim they would turn down 100M, but few have actually done it.

Mark Zuckerberg was offered $1 billion dollars from Yahoo. After offered the money Mark and Peter Thiel (investor) had a talk about the offer. Marks comment was "obviously we're not going to sell here." Peter didn't feel the same way. Today Peter is very grateful Mark didn't sell. Mark had a vision for FB that Yahoo didn't, and he knew that if he sold he would never see his vision come true.

Meh. On $100 million the common employees aren't going to see much anyway. Maybe for #1 and #2 it'll be a big deal, but for #10 with his 0.002 of the company, that's going to be a nice bonus and not much else. So I can understand the founders deciding to shoot for the moon.

It's a false dichotomy. If someone's willing to pay $X for your company, you can do a secondary sale at ~.75*$X pre-money valuation to give key employees some liquidity. No, it's not the same, but it's still real money, and certainly alleviates the $100M-&#62;zero risk.<p>And if it's a real business whose value is based on, say, an EBITDA multiple, there's even less reason to sell, unless you think earnings are going to tank. (Presumably you will have significant visibility into the factors that determine your revenue and EBITDA growth, and what might cause those to change.)<p>But if you made a little photo-sharing app that earns no money, and someone wants to buy it for a truckload of money, sell. :)

Business Insider Sucks. I think they hire teenagers from a local high school newspaper to pump this shit out in 60 seconds.

In Dodgeball/Foursquare's case, how do deals like this work? I assume when you sell a company you also sign a non-compete agreement.<p>For example, Instagram couldn't have just sold to facebook for $1B then turn around and make the same thing again. Obviously they no longer have rights to the code, but re-creating it wouldn't be <i>that</i> hard if you already did it once. It could be like forking an open source project, except you make a bunch of money.<p>Is that that in the Dodgeball/Foursquare example, the non-compete was apparently incredibly specific, and this allowed them to make a different location-aware social network?

I was surprised not to see Digg on this list. Was it ever offered $100+ million?

While raising $100M sounds awesome, its really hard to increase the value of your company. This means unless you raise an even bigger round next time, you are risk de-valuing your company in the future by raising so much money right now (called a downround in VCs).<p>Raising so much money also runs the risk of ownership dilution and if you have a downround in the future, your ownership will probably get diluted even more to maintain the % ownership of previous investors.

What a negative article. I disagree that any founder is "stupid" for not jumping on their first chance at life-changing money. By BusinessInsider logic, Facebook should have been bought out by Friendster or Microsoft. Dropbox should have been acquired by Apple. There are other examples. This approach just encourages a "get rich quick" mentality, which is probably not the best way to create unique and impactful products.

I think you cant have an ideology going into your venture whether it be "holdout for the biggest offer" or "shoot for the moon". You should take things as the come and do what you think is right. I also think there is a price that everyone will sell at and thats not a bad thing. Money is very important and they people who downplay its importance often have alot of it

What happened to those who didn't turn down a $100M offer. They are now sitting in their luxury home and watching TV.

The spirit of this article is very negative - more "expected value-maximizing" than entrepreneurial.<p>Its logic is also questionable - you do not retroactively assess the correctness of a decision by looking at its outcome.

Yahoo! turned down an offer of 60M from AOL in early days of internet boom. Facebook turned down Yahoo!'s 1B offer. Google turned down Yahoo!'s 3B offer.

I know its vague but, how about 500 million? If your company is worth more, would you cash out for 500 ?