It looks like FusionGarage was looking at initial funding (or acquisition) from techcrunch early in product development cycle. And techcrunch (i believe intentionally) avoided commiting anything earlier itself since they thought it as too risky. Techcrunch thought that they would bring in world class investors and team later around the product development ( few months before launch) and get a good stake in the product for that. And FusionGarage investors were frustrated that TC can come around later (when the risk is too low) and take a major bite of it.

In between, TC claims that they did initial marketing for the product. Technically it may be correct. But From risk factor, what was at stake here for TC ? Actually TC biz model works on buzz factor. More Buzz equals more readers and Revenue. So at worst (if product fails), they made some money out of the whole buzz. But for FusionGarage (and their investors), everything was at stake.

Arrington might be correct, they could have negotiated on the product stake. ( How about : 2% for initial idea discussion, 2% for initial marketing, and 2% bring in new investors and team .) I guess such a 5-6% offer would have still led to such a breakup. (But can u give a 30% stake just for blogging about a product ?)

To me, Arrington is a Bad (Scary) Startup-Investor here (keeping the startup in guessing game till end ..), and FusionGarage has a bad CEO who could not anticipate what was to come. And those investors are smart to bring the whole stuff out before the product is actually launched.