Stephen Foley: Zynga founder plays the Silicon Valley game

US Outlook Mark Pincus, the founder and chief executive of the Facebook games developer Zynga, the man behind CityVille and FarmVille and Words with Friends et al, just netted $200m (£125m) from the sale of 16.5 million shares in the company.

That is three months after the company floated on the stock market here, when Mr Pincus's decision not to sell any stock was seen as a plus point for nervous investors considering buying Zynga shares.

Now, Mr Pincus still has 13.5 per cent of the company, down from 15.5 per cent, so his sale is hardly a vote of no-confidence, but it is just one of a number of reasons why the whole Zynga float process leaves a bad taste in the mouth. Worse, Zynga is hardly alone. It is following the template of all Silicon Valley floats, one which will be followed by Facebook itself in May.

By selling just a sliver of the company's shares – 14 per cent in Zynga's case – these companies engineer a pop in the share price when it floats, only to saddle investors with years of drip-drip selling by insiders thereafter. Additional sales are dressed up as "providing liquidity" and managements act for all the world as if shareholders should be grateful they are selling.

Mr Pincus and his top executives and early financial backers got a decent price for their stock, just 2 per cent below the market, so this hasn't been as disruptive a secondary offering as, say, LinkedIn's last November. But if it turns out that hints of declining player engagement turn into a full-on earnings crisis for Zynga, the bad taste will be all the stronger.

s.foley@independent.co.uk