4 ms·

Real VC Might Be The Safest Asset Class Today

9 points by qhoxie 18y ago

tptacek 18y ago
How do "RVC" "classic VC funds" and angels make any money if there are no stock market exits and big fish have no leverage or market cap to buy little ones? There are companies that will very likely cancel S1's now.
- bernardlunn 18y ago
  It is simple. Become profitable. That is what businesses were designed to do. Once you become profitable, you get lots of options. You can take Dividends aka share of profits, sell to another firm, sell to Private Equity (OK, without cheap credit that game is over for a while), even go public when the time is right or in the right location (eg AIM in London). Think Buffet more than Soros. Something happened around 1995 when techies became traders. Build a great biz and forget about Mr. Market. If your current VC won't finance you to profitability, change your business model and if you cannot do that close shop and start again. Bernard Lunn (author of the article)
iigs 18y ago
As an employee in a large, well funded RVC venture, I would say I feel considerably more secure about my position than I would be if I was in a MVC or possibly even in the financial sector. Our pockets are certainly no deeper than our (established) competitors, but having strategic investment from household names is certainly reassuring. I'm not an investor (beyond my options in this company) but I'd say that "here's our burn rate" is a lot safer and easier to understand than "we've been loaning people imaginary money and it will all be ok, please don't ask how". Even if the IPO market sucks right now it's entirely possible for well funded companies to go lean, and then profitable, and then grow from there. In fact, that used to be the way most businesses grew.
jmtame 18y ago
I would consider VCs much safer than the garbage going on in Wall Street. I know Aerons are expensive, but damn, a $400,000 week-long vacation at St. Regis?

4 ms·

Real VC Might Be The Safest Asset Class Today

9 points by qhoxie 18y ago

tptacek 18y ago
How do "RVC" "classic VC funds" and angels make any money if there are no stock market exits and big fish have no leverage or market cap to buy little ones? There are companies that will very likely cancel S1's now.
- bernardlunn 18y ago
  It is simple. Become profitable. That is what businesses were designed to do. Once you become profitable, you get lots of options. You can take Dividends aka share of profits, sell to another firm, sell to Private Equity (OK, without cheap credit that game is over for a while), even go public when the time is right or in the right location (eg AIM in London). Think Buffet more than Soros. Something happened around 1995 when techies became traders. Build a great biz and forget about Mr. Market. If your current VC won't finance you to profitability, change your business model and if you cannot do that close shop and start again. Bernard Lunn (author of the article)
iigs 18y ago
As an employee in a large, well funded RVC venture, I would say I feel considerably more secure about my position than I would be if I was in a MVC or possibly even in the financial sector. Our pockets are certainly no deeper than our (established) competitors, but having strategic investment from household names is certainly reassuring. I'm not an investor (beyond my options in this company) but I'd say that "here's our burn rate" is a lot safer and easier to understand than "we've been loaning people imaginary money and it will all be ok, please don't ask how". Even if the IPO market sucks right now it's entirely possible for well funded companies to go lean, and then profitable, and then grow from there. In fact, that used to be the way most businesses grew.
jmtame 18y ago
I would consider VCs much safer than the garbage going on in Wall Street. I know Aerons are expensive, but damn, a $400,000 week-long vacation at St. Regis?