FilmLoop had a cap busted in it's ass.

filmlooplogo.jpgFrom TechCrunch: FilmLoop Betrayed by it's investors?

December 2006: ComVentures proposes Fabrik, another one of their portfolio companies, as the acquiror. FilmLoop was unable to find any other acquiror in the last two weeks of the year. Fabrik acquires FilmLoop for little more than the cash ($3 million) that FilmLoop has remaining in its bank account. Due to liquidation preference rights, the founders and all employees walk away with exactly nothing.

...Founders are under incredible pressure not to rock the boat when venture capitalists pull stunts like this. Engaging in litigation means other VCs will be very hesitant to invest in them in the future. For reputation purposes, founders tend to simply take their beating and walk away, hoping to start all over again with another venture and, hopefully, non-ethically challenged investors.

As Borat says... 'Nice'.

It's not the post itself but the 101 comments that's the interesting part since you'll never know from the outside what really went on in the board room.

It's something new to see VCs have to defend their actions to the blogosphere as though they were a consumer facing business.