Technorati is a robust blog search engine with the largest user base in its industry. Those users are served an array of text and graphic ads, often matched to search terms. It seems like a perfect recipe for revenue.
But just last week, the company took a $7.6 million round of funding that likely makes the VCs its majority shareholders. This is something a desperate startup does, not a healthy one with profit and growth potential. Why sell control for a quick shot of capital?
Remember that when a company sells, the investors get paid first. And now the VCs will take over half that money. So even if CEO Dave Sifry is willing to give up control, he's probably not crazy about carving away at his founder's share.
But this shouldn't happen! If anyone should have sold for millions, years ago, it's Technorati! Valleywag's still digging for answers. If you want to help, tip email@example.com. Your anonymity will be protected.