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So my understanding of raising money is completely wrong, the only part that matters to investors is if the company goes public or is sold?
by citricsquid 15y ago
So my understanding of raising money is completely wrong, the only part that matters to investors is if the company goes public or is sold?
- dfriedmn 15y agoNo, it's not wrong - but as always it's complicated. VC's have a relatively short time horizon within which they need to provide a return to their LP's, and their returns typically are driven by a few outsized successes (>7-10x). Sometimes entire funds can be made because of one mega-hit, and that always seems to be on people's minds when considering cos. Dividends aren't ideal for returning a fund, and investors are often nervous about deals with a capped upside.
- brandnewlow 15y agoVCs just don't do divdends. Why take money out along the way when you can invest it into the company to get a bigger exit?
- maaku 15y agoNot saying VCs dont' think that way, but sometimes throwing money into a company wont have the slightest effect on size of exit.