Liquidation preferences can dramatically change the math on how big an acquisition needs to be to be profitable for the founders.
Say you've got 3 founders who each want to make at least $2M for a startup they've been toiling away at for 5 years which has built something kinda-sorta useful but not a huge hit (that's roughly equalling what they would've made at Google/Facebook). If they took a $5M Series A at $15M post with 1x participating preferred, they need to sell for ~$17M to hit their target (the VC gets their $5M back, then $4M of the remaining $12M for their for their 33%, then 20% goes to the employees from the option pool, then the founders split the remaining $6M). If they took no funding, they need to sell for $6M. If they took just angel/seed funding for 25% of the company, $8M.
It's generally a lot easier to get acquihired for $1-2M/head than for $5M/head.
Say you've got 3 founders who each want to make at least $2M for a startup they've been toiling away at for 5 years which has built something kinda-sorta useful but not a huge hit (that's roughly equalling what they would've made at Google/Facebook). If they took a $5M Series A at $15M post with 1x participating preferred, they need to sell for ~$17M to hit their target (the VC gets their $5M back, then $4M of the remaining $12M for their for their 33%, then 20% goes to the employees from the option pool, then the founders split the remaining $6M). If they took no funding, they need to sell for $6M. If they took just angel/seed funding for 25% of the company, $8M.
It's generally a lot easier to get acquihired for $1-2M/head than for $5M/head.