Heh. Well, so, that's not exactly how it works. They had raised something around $60-70m in three or four rounds, including one round that involved firing/departures of most of the original founders, a new management team, and a totally new business focus.
So first of all, every time you do a round of fundraising, you create new shares of stock. Let's say my company has 100 shares of stock, and you're a 10% owner of stock - that means you own 10 shares of stock. When we want to raise money, we go convince an investor that our company is worth $100,000, or $1000 per share, making your shares worth $10k. We then have the investor give us $100,000, we create 100 new shares of stock, making the company worth $200k "post-money" - but now you only own 5%, and your investors own 50%. On top of that, the investors might say, "hey, we want liquidation preference, or participating preferred" - complex subjects that can't be delved into here, but suffice it to say that gives them more power.
Ok, time goes by - you spend that $100k you've raised, and while business is not terrible, it's not as good as your investors had hoped. You go back to get more money, and they say, "Sure, we'll give you another $100k, but we really don't think the company has progressed like we'd hoped, so the total company is worth $150k pre-money" - whoops, now your shares are worth $7,500. And after another 133 shares are created, you now own around 3% of the company.
See how fast individual ownership can drop? Now, let's extend this factor to someone like VirtualIron who was raising $10-25m *every time* they raised money, and changed business models once. You can bet that by the time they went through four rounds of funding, the VCs owned almost all of that company. (By the way, I realize that this is only the most simplistic model of how companies fund operations through VCs, so don't yell at me - I don't have the space to talk about every option).
According to some papers that had been leaked to the nytimes, in 2008 they did $3.4m in revenue and lost something like $17m on that $3.4m. How much can that company be worth? Typical rule of thumb in tech stock transactions is 5x-12x revenue, depending on a variety of factors. Given that it cost them $17m to make $3.4m - one could see how the multiplier is not gonna be so favorable. Let's make it 6x - that's $20m.
So, you have a company where investors have sunk and lost $60m, fired management at least once, changed business models once, changed products at least once, and in the end, they're getting bought for between $16-32m. Do you think that anyone got more than a "thanks for selling this dog of a company" bonus?
It's a shame, and I feel bad for the employees, but this is not a tech success story.