I thought you were tallking about the "bad guys" in the vietnam war
On 10/27/06,
Blue Boar <[EMAIL PROTECTED]> wrote:
Fergie wrote:
> http://en.wikipedia.org/wiki/Venture_capital
> -- "Dude VanWinkle" <[EMAIL PROTECTED] > wrote:
> whats a vc firm?
Sorry Dude, I was making too many assumptions about what people know.
Near Silicon Valley here, everyone knows how venture capital works. ;)
Short version of the story: a high tech company needs money to develop
their product. VC firms are in the business of giving money to such
companies, if they think there is a chance of success. In order to
protect their investment, they usually get some level of control over
the tech company, get seats on the board, and have a say about replacing
current executives and adding new ones. And of course they now own some
portion of the company, however much they paid for. Usually in the form
of stock.
Now, VC companies work by giving out lots of money to a lot of
companies, and hoping for one spectacular success in many 20 companies.
That means that 19 companies will fail, and number 20 needs to make
20+ times the investment. About the only way the VC firm will get that
kind of payback is if the company goes public, or gets acquired.
Therefore, if you take VC money, they will drive your company towards
that end. And you may not fail all the way, the VC may eventually
decide to cut their losses, a recover at least some of the investment.
See: Counterpane.
BB
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