4 ms·

I honestly don't know, what is vc backed, and how does that turn it's destiny into an exit?

deleted 8y ago
[deleted]
gaius 8y ago
They have taken money from venture capitalists who will expect a return on their investment via a sale. That is how the entire venture capital system works. This is all a matter of public record tho’ it makes uncomfortable reading for some. Those who fled Github to Gitlab when Microsoft bought the former might now find a critical piece of their workflow owned by Oracle!
- nine_k 8y ago
  You can run a Gitlab installation locally, unlike Github. I wonder if setting up Gitlab on premises is already a (small) business.
- Redoubts 8y ago
  > They have taken money from venture capitalists who will expect a return on their investment via a sale. Or, you know, an IPO. Which is precisely the exit they claim to want: We want to IPO in 2020, specifically on Wednesday November 18. https://about.gitlab.com/strategy/ https://about.gitlab.com/strategy/
  - skinnymuch 8y ago
    Is there any word on how big their losses are, assuming they don’t make a profit? GitHub wasn’t making a profit anymore, but they also don’t provide as much for free as Gitlab (not that Gitlab is doing it purely to be nice. It’s a key differentiator for them). I’d imagine Gitlab’a financials are weaker than GitHub. IPO would probably be a lot weaker play than an acquisition. But I’m just guessing.
jacques_chester 8y ago
Venture capital is based on distinct funds which are raised one at a time. Each pool of money is distinct from the others that a VC might control. They need to report on them individually and they need to pay out of them individually. The key is that each fund has a fixed lifetime, often something like 7-10 years. At the end of the lifetime the final value of the fund is returned to the investors. It's hard to return cash you don't have -- and worse to return a reduction in value to investors (since you'll find it harder to raise next time). So as a practical necessity, at some point, there needs to be a big liquidity event for one or more investments made out of the fund. That could be an IPO or a purchase by another company. Because of the highly speculative nature of VC, almost all of the companies supported out of a fund will fail. These will essentially be ignored. Some few of them will be bought at a price that covers their cost. A very few will do well enough that they are genuine prospects for a big liquidity events. Those companies will be under the most pressure to cash out. Gitlab has taken several rounds of funding now, some very large. These do not appear to have been made on the basis of current assets or current earnings. It seems reasonable to conclude that VCs predict a large exit and wish to ensure that Gitlab will make it to what is, for them, the finish line. Disclaimer: I have never worked in finance and my views are cobbled together from books and blogposts.

deleted 8y ago

[deleted]

They have taken money from venture capitalists who will expect a return on their investment via a sale. That is how the entire venture capital system works. This is all a matter of public record tho’ it makes uncomfortable reading for some. Those who fled Github to Gitlab when Microsoft bought the former might now find a critical piece of their workflow owned by Oracle!

nine_k 8y ago
You can run a Gitlab installation locally, unlike Github. I wonder if setting up Gitlab on premises is already a (small) business.
Redoubts 8y ago
> They have taken money from venture capitalists who will expect a return on their investment via a sale. Or, you know, an IPO. Which is precisely the exit they claim to want: We want to IPO in 2020, specifically on Wednesday November 18. https://about.gitlab.com/strategy/ https://about.gitlab.com/strategy/
- skinnymuch 8y ago
  Is there any word on how big their losses are, assuming they don’t make a profit? GitHub wasn’t making a profit anymore, but they also don’t provide as much for free as Gitlab (not that Gitlab is doing it purely to be nice. It’s a key differentiator for them). I’d imagine Gitlab’a financials are weaker than GitHub. IPO would probably be a lot weaker play than an acquisition. But I’m just guessing.

jacques_chester 8y ago

Venture capital is based on distinct funds which are raised one at a time. Each pool of money is distinct from the others that a VC might control. They need to report on them individually and they need to pay out of them individually. The key is that each fund has a fixed lifetime, often something like 7-10 years. At the end of the lifetime the final value of the fund is returned to the investors. It's hard to return cash you don't have -- and worse to return a reduction in value to investors (since you'll find it harder to raise next time). So as a practical necessity, at some point, there needs to be a big liquidity event for one or more investments made out of the fund. That could be an IPO or a purchase by another company. Because of the highly speculative nature of VC, almost all of the companies supported out of a fund will fail. These will essentially be ignored. Some few of them will be bought at a price that covers their cost. A very few will do well enough that they are genuine prospects for a big liquidity events. Those companies will be under the most pressure to cash out. Gitlab has taken several rounds of funding now, some very large. These do not appear to have been made on the basis of current assets or current earnings. It seems reasonable to conclude that VCs predict a large exit and wish to ensure that Gitlab will make it to what is, for them, the finish line. Disclaimer: I have never worked in finance and my views are cobbled together from books and blogposts.