Founders Now Take the Money and Maintain Control

In a small office in San Francisco, electronic music blared as several programmers loomed over two computers. David Morin, the founder of Path, a social network start-up, gave the signal and the company’s site and iPhone application went live.

Within three hours of its Nov. 15 introduction, the site had tens of thousands of visitors.

Since then, Path has walked away from takeover talks with Google for as much as $100 million, according to a person close to the company, and raised $11 million from 27 investors. More revealingly, Path has turned down more than that from at least that many investors.

“I was humbled by the level of interest — we’re trying to build something that is deeply meaningful,” Mr. Morin said. “As long as I’m doing my best to lead, I want to keep going.”

For every Facebook, Groupon or Zynga, known for its Farmville game, there are scores of lesser-known start-ups like Mr. Morin’s that are raising millions in financing at steep valuations, turning computer programmers into paper millionaires overnight.

Part of the reason is supply and demand, as a wave of capital chases a limited supply of deals. But a more tectonic shift is at work in Silicon Valley. Investors are putting a significant premium on young, visionary entrepreneurs who grew up with the Internet and now seem best positioned to direct the future of the social and mobile Web. Generally in their mid-20s or early 30s, today’s start-up founders are becoming more assertive in funding rounds, securing better terms and, in many cases, cashing out part of their investments well before an initial public offering.

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