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How much did Tumblr's VCs really make?

May 22, 2013: 10:34 AM ET

tumblr-dashboardReports of VC returns on Tumblr have been greatly exaggerated.

FORTUNE -- Yesterday there were several news reports about how Union Square Ventures had generated a "5,000% return" on its early investment in Tumblr, based on data from research firm Privco. They also claimed that Spark Capital's Bijan Sabet made $77 million for himself, in addition to whatever carry he's entitled to as a partner in the Spark Capital fund that invested alongside USV.

In short, the Privco report is a load of Yahoo.

Here are the actual numbers, based on sources familiar with the situation: USV and Spark Capital each invested a total of $13 million, including $350,000 each in the company's original funding round. Then they each plugged in $2 million during each of Tumblr's next two rounds, before going the pro rata route on the Series D (led by Sequoia Capital) and Series E (Greylock/Insight) rounds.

Following Tumblr's $1.1 billion acquisition by Yahoo (YHOO), USV and Spark each received around $192 million in proceeds (i.e., a combined 35% stake).

Obviously a massive return for each of them, but not the stratospheric figures that Privco quoted. Moreover, the returns all are at fund-level rather than for individual partners. In other words, Spark's Sabet likely makes millions off of this deal based on his share of Spark's "carried interest" – but nothing close to $77 million.

Spark and USV declined to comment on specific figures, although USV's Fred Wilson did comment on Hacker News that the Privco figures were "total garbage." And, to be clear, returns aren't usually something that a venture capitalist wants to talk down...

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Dan Primack
Dan Primack
Senior Editor, Fortune

Dan Primack joined Fortune.com in September 2010 to cover deals and dealmakers, from Wall Street to Sand Hill Road. Previously, Dan was an editor-at-large with Thomson Reuters, where he launched both peHUB.com and the peHUB Wire email service. In a past journalistic life, Dan ran a community paper in Roxbury, Massachusetts. He currently lives just outside of Boston.

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