I don't know what Yahoo paid for online contest web site Bix.com, so it's hard to make an informed judgment about this deal. But, working under the assumption the purchase price for the months old startup is in the $25 million range, I have to wonder what the point is for the venture capitalists involved.

Sutter Hill Ventures, Trinity Ventures, and three smaller investors including Stanford University invested $6.7 million into Bix earlier this year. That would suggest they're looking at a 2X, or maybe 3X, return here. Sure, it's fast and not a loss, and maybe Sutter Hill and Trinity are looking for a profitable exit to tout to their LPs. But, they both have had a nice string of exits in recent months, so that shouldn't have been the motivator here.

I find it hard to believe that something changed from the time the investors cut their deal with Bix to the time this sale with Yahoo was agreed to that made the investors think that their portfolio company no longer had the potential to grow into a bigger startup. So, that points to the large team of founding entrepreneurs as the driver of what is a very early sale for a venture-backed startup.

For more on Bix's sale to Yahoo, see:
New York Times
Yahoo's blog

Tags: bix, bix.com, yahoo, yhoo, vc, venture capital