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I don't understand what's so complicated about my original question. She says she's not going to sell the company. It's reported that she took $2.5M. Let's say
by rewind 15y ago
I don't understand what's so complicated about my original question. She says she's not going to sell the company. It's reported that she took $2.5M. Let's say she gave up 50% of the company for that (which I'm sure she didn't). And let's assume that the investors want their return within the next ten years (they probably want it sooner). And let's assume it's 10x. So these are ALL very conservative numbers for early stage investors. Let's say she ends up with 50% net profit (never gonna happen). And let's say she pays out 100% of profits as dividends (never gonna happen). That means the investors have to average $2.5M/yr in dividends over the next ten years, which means she has to be doing $10M in gross per year, on average, with 50% in profit. For a tech blog, I think most people will agree this is probably beyond unreasonable. And remember, she said she's never going to sell it.
So again, all I'm asking is where are the investors supposed to get their returns?
- nl 15y agoIt is a good question, your analysis is correct and I don't know why you are getting down votes. I suspect the answer is three-fold. 1) Investors hope to get returns on private markets. Private markets provide a lot of liquidity these days. 2) Investors (and people who buy on private markets) hope that Sarah means "I want to retain control" when she says "I don't want to sell". It is a reasonable intepretation, and can provide excellent returns (did the Google guys "sell"? Did Zuck? Murdoch?) 3) Investors have a long term investment timeframe. They hope in 10 years time she feels differently.