And poor VCs. This is another example of the big three (Yahoo, Google,
Microsoft) swooping in to buy cool companies before venture capitalists
can even invest. Are VCs getting shut out from making money on the best
Web 2.0 features? Beginning to seem so.
Be serious. At a supposed $7mm exit price, even assuming you participated in a $1mm pre-money Writely angel round, this would only move the needle on a sub-$50m venture fund. And that is not the same thing as saying that venture funds are therefore too large. Sure, some are, but there are still plenty of places where you can useful invest in a $200mm venture fund (i.e., life sciences, energy, security, materials, nano, etc.).
Anyway, while there are legitimate complaints about the current structure of the venture business (e.g., cascading funds, succession issues, etc.), a few tiny non-VC deals getting done at the fringes of the software market does not an epitaph make.