FORTUNE — “You never know, it could be the next Instagram.”

I have heard that line, or some variation thereof, from venture capitalists more than a dozen times since Facebook FB  agreed to acquire the mobile-sharing site back in April for “$1 billion.” It’s supposed to mean that overpaying can sometimes pay off, and that big returns aren’t always predicated on helping to build large, sustainable businesses.

But as Facebook shares continue to slide, the fairy tale is beginning to darken.

For the uninitiated, Instagram raised $50 million in venture capital funding at a $500 million valuation on April 4 or 5. That weekend, Facebook offered to buy the company for $1 billion. The deal was announced on Monday. Sure there had been bigger multiples and dollar amounts than 2x and $50 million, respectively, but usually those results took years on the calendar and countless hours in the boardroom. This was settled in just a matter of days, without the VCs having to do any actual operational work with the company. The internal-rate-of-return (IRR), which takes time into account, was extraordinary.

Unfortunately, the deal didn’t actually close on April 9. In fact, it still hasn’t closed.

Facebook originally said Instagram would be in-house by the end of Q2, but has since extended the timeline to sometime before the end of 2012. Each day that goes by eats gently into the IRR.

More importantly, only $300 million of the purchase price was in cash. The rest was in Facebook stock, which today closed trading down around 4% to just $20.04 per share. That puts the total deal value at $760 million. Still a hell of a return on an April valuation of $500 million, but much less impressive than it had originally appeared. And, for context, the cash-on-cash return is now down to just around $26 million.

Break-even would be around $8.69 per Facebook share.

To be sure, there’s a very good chance that Facebook’s value will rebound and carry Instagram’s venture backers along for the ride. But at some point the VC market is going to realize that Instagram is not its gold standard. Right now, it’s staring at the bronze.

Sign up for Dan’s daily email newsletter on deals and deal-makers: