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It turns out that in enterprise software company acquisitions, VCs will often prioritize customer satisfaction over millions of dollars of cash money. That's b
by gleb 15y ago
It turns out that in enterprise software company acquisitions, VCs will often prioritize customer satisfaction over millions of dollars of cash money.
That's because there are a lot of startups that, say, Sequoia backs, but there is only one IBM. If a Sequoia-backed startup screws IBM, IBM CIO will not talk to another Sequoia startup for the next 10 years.
- tptacek 15y agoCan you provide specific examples of this? Because there are only a few major acquirers of security software/hardware companies (Cisco and Symantec being by far the leaders) and I have never observed this mentality among those companies; there are absolutely VCs that tend to make investments in IT security companies, too. It is also the case that what is true for Sequoia --- the top tier of the top tier of the top tier of VCs --- is probably not true of the asset class as a whole.
- gleb 15y agoA company that I worked for, Pivia (HTTP acceleration software/appliance), was sold to Swan Labs that continued to service existing customers rather than to an alternative that would have paid more, but was more interested in IP and engineers. To be clear, we are not talking about successful acquisitions that make the fund. There interests of shareholders and customers are likely to be aligned anyway. I agree, but few things are true of VC funds as asset class as a whole. Top-tier funds behave differently than the rest.