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Why would the investors invest in something where they wouldn’t get a large part of the returns? They’re not investing their own money, they have investors (th
by ericd 7y ago
Why would the investors invest in something where they wouldn’t get a large part of the returns?
They’re not investing their own money, they have investors (things like pension funds) that they have to answer to. And honestly, the majority of VC funds don’t do very well, even taking the large stakes they do. It’s a hits driven business, and if you don’t get those one or two breakout successes, you probably don’t make back your fund.
- throwaway_law 7y ago>Why would the investors invest in something where they wouldn’t get a large part of the returns? Why would you think the investors would get any less returns if the entity (say uber) was driver owned? They wouldn't everything remains the same, except instead of a concentration of ownership in a small group of founders, that same percentage of ownership would be distributed among a larger group of workers. So the real question is why are investors so adverse to employee owned enterprises and invest in small groups of founders.
- ericd 7y ago>stop the madness of centralizing the wealth among founders and investors, and distribute it to the workers. This seemed to imply that the investors would take less of a stake. Are they adverse to funding employee owned enterprises? I've never looked into it. Maybe they think that companies with dictatorial management are more effective at competing? For the record, having been a founder, I agree that equity tends to be overly concentrated with the founders.