Sunday, May 8, 2011

Is this VC dumb or attempting to be manipulative

The Next 10 Years Will Be Great For Both Founders And VCs

It costs less now to create and server a service. Good.

The majority of the article disuses how much of a companies eventual value goes to founders, investors in pre-IP) shares, and investors in post IPO shares, arguing that founders and early investors are better off because IPOs are not happening now until a company has a multi-$billion valuation. He essentially assumes that all post IPO gains go to public share investors without ever mentioning the percentage float. He never mentions that founders desire liquidity for some of their share to ensure their lifestyles. He does not mention that onerous regulation, i.e. Sarbanes/Oxley has increased the initial and ongoing costs associated with going public making raising additional, ever larger rounds privately preferable. So who are the real winners when Facebook stays private? The later stage investors and financial innovators and deal makers such as Goldman Sachs.

This is a wonderful example of his nuanced analysis.
"To put it another way, the rewards for building a truly great business – say, the world’s biggest etailer or the largest online auction site – accrued mainly to the public shareholders. That’s right. The ones who went through all the hard work of logging into their E*Trade accounts and clicking the “Buy” button. They participated in over 99% (literally) of the value created from these brilliant entrepreneurs and their wonderful companies."

What was the float? These investors shouldn't be rewarded for taking risk? If so easy, why did you not put all your money in Google when in IPO'd?

He went from USC (university of spoiled children), to Harvard, to Disney, to VC. Bet hes never done anything other than BS people based on his credentials, last name, and shit eating grin.
I now go to his, May 2011 article,

"Venture capital was one of the best asset classes in the world before the dot-com bubble burst." Really, returns were good during the blowing up of a bubble?

"So today, the venture capital community finds itself at a cross roads. While the asset class has been largely abandoned by institutional investors, this disinterest will paradoxically lead to superior returns in the future."

This is essentially the opposite of reality, Angles and VC are complaining the valuations are too high to allow for profitability.

It's good to be born rich. If my analysis is incorrect, please let me know.

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