Who Hates Photobucket Investors Insight Venture Partners?

The WSJ's Peter Lattman spends several hundred words today exploring the behind-the-scenes story at Photobucket and Insight Venture Partners, the primary investor in the photo-sharing site prior to its 2007 sale to News Corp. The gist: Rather than bringing the deal to its limited partners, IVP employees invested in the deal themselves, and banked a huge return. The problem: While Peter suggests that this is murky and problematic and that it "highlights a dicey game", he can't find anyone who's actually upset about it.

That's because Photobucket deal -- $3 million for a 20% stake in a social media company with "nominal" revenue -- wasn't the kind of deal IVP's LPs signed on for. Instead, the $3 billion fund generally makes late-stage investments of about $35 million in companies that that have upwards of $25 million in sales. Peter does find one anonymous IVP investor who seems like he might be willing to complain, but then he yawns and dozes off mid-quote:

"Perhaps they should have told us about this, but it was such a small deal. Would we have wanted a piece of it in hindsight? Sure. But for every one of these successes, there are a hundred failures."

More interesting to us: The identity of the anoymous tipster who pitched the WSJ and just about every other media outlet, including us, the story. Presumably, it's not someone who actually invested with IVP -- otherwise Peter would have quoted them. So who is it? Valleywag's Owen Thomas speculates:

A spurned entrepreneur? A rival venture capitalist who lost a deal to Insight? It's useful to keep in mind that venture capitalists can make a lot of money on side deals — deals they heard about in the course of doing their day jobs. 'Twas ever thus. The person who thinks he ratted out Insight, though? He'd like you to believe that some venture capitalists are so venal and so foolish as to torpedo their entire careers over a tiny deal that happened to turn out well. Insight's opponent, whoever he is, underestimated the firm's intelligence — and some reporters' intelligence, too.