$250,000 first cheque · 2010
Steve Anderson
Instagram, 2010
Baseline Ventures wrote Instagram its first cheque, and the exit that followed contains the most useful footnote in this entire section: the announced price was not the price.
What happened
Steve Anderson, running Baseline Ventures as essentially a one-person operation, wrote Kevin Systrom a $250,000 cheque in 2010 — Instagram's first outside money, at a point when the product was not yet the product it became.
Two years later Facebook agreed to acquire Instagram, and the number that entered public memory was $1bn. That number is the one everybody repeats and it is not what was paid.
The consideration was part cash and part Facebook stock, agreed before Facebook's own public listing. Facebook's share price fell substantially between announcement and completion, and the deal closed at a materially lower value than the announced headline. Everyone holding Instagram equity was paid on the closing value, not the announced one.
It remains a superb outcome from a first cheque of $250,000. It is also the cleanest available illustration of why our exit waterfall guidance insists that the announced price is the maximum consideration and not the distributed cash.
Where sources disagree
What we do not claim
Reported figures for Baseline's ownership at exit vary between accounts, so this page does not state a percentage. The announced-versus-closing gap, by contrast, is well documented and is the point of the entry.
For your own cheque
What an angel takes from this
- Read the consideration, not the headline. A deal announced in stock is a deal whose value moves until it closes, and shareholders are paid on completion. This is not an edge case — earn-outs, escrows and stock consideration mean the announced number routinely overstates what reaches the register.
- The second lesson is about firm size. This was a first cheque from an investor operating alone, which is a useful corrective to the assumption that good deals only reach large institutions. Access at the earliest stage is much flatter than it is later.
- Third: the product Instagram became was not the product that was funded. Backing a team that could recognise which part of their own product was working is the actual skill on display, and it is the thing pre-seed diligence is really trying to assess.
Checked, not remembered
Sources
Every figure on this page is traceable to published reporting. Where credible sources disagree we say so above rather than picking the most quotable number, and we do not state what a stake is “worth today” — that moves with the share price and is stale the moment it is written.
The mechanics