4 ms·

This is pretty light on details and it kind of makes no sense. Everyone loves the product and it's a (apparently very) profitable business. What can Andreesen

This is pretty light on details and it kind of makes no sense. Everyone loves the product and it's a (apparently very) profitable business. What can Andreesen Horowitz do to help them other than come in and do another bubbly ol' flipparoo?

noahc 14y ago
It allows founders to take money off the table without selling out to a company who would have interests other than growing github.
- jmathai 14y ago
  How does that make sense for the VC though? They're not in the business of cashing founders out.
  - snprbob86 14y ago
    Presumably the founders are committed to growing the product line and potentially creating a new publicly traded developer tools company.
  - deleted 14y ago
    [deleted]
  - noahc 14y ago
    One senerio would be give the founders enough that if they swing for the fences and strike out they still have enough. This aligns incentives and removes risk from founders. In addition, if founders want to take cash off the table and that is what it takes to make a great investment in github you do it.
  - deleted 14y ago
    [deleted]
  - amorphid 14y ago
    VCs are in the business of making money for their fund. Any deal that helps work towards that goal is legit. What a company receiving the money does with the money invested is secondary to getting a return on investment. For example, Elevation partners vought Facebook shares via secondary markets because they expected the shares to be worth significantly more than the initial purchase price .* The investment never went into Facebook's bank account. * Source -- http://m.techcrunch.com/2010/04/05/source-elevation-partners-got-about-1-of-facebook-for-90-million http://m.techcrunch.com/2010/04/05/source-elevation-partners....
- wavephorm 14y ago
  They can sell some of their shares to private investors. A VC expects to earn many times their money on the investment... which requires dramatic and risky expansion of the business.
  - noahc 14y ago
    Private investors of all types have their own problems. Everyone from the local angel group to friends and family to private equity firms all have advantages and disadvantages. A VC wants 10x, I see no better way to allow this than to let a founder take some money off the table and shoot for the moon. As far as risk is concerned with expansion, as long as the founders and the VC want the same outcome I dont see what the big deal is with taking on more risk, particularly for founders with other peoples money. Even better after theyve taken money off the table!
- swombat 14y ago
  As far as I know GitHub is very profitable. I'm sure they have taken plenty of money off the table as dividends already.

noahc 14y ago

It allows founders to take money off the table without selling out to a company who would have interests other than growing github.

jmathai 14y ago
How does that make sense for the VC though? They're not in the business of cashing founders out.
- snprbob86 14y ago
  Presumably the founders are committed to growing the product line and potentially creating a new publicly traded developer tools company.
- deleted 14y ago
  [deleted]
- noahc 14y ago
  One senerio would be give the founders enough that if they swing for the fences and strike out they still have enough. This aligns incentives and removes risk from founders. In addition, if founders want to take cash off the table and that is what it takes to make a great investment in github you do it.
- deleted 14y ago
  [deleted]
- amorphid 14y ago
  VCs are in the business of making money for their fund. Any deal that helps work towards that goal is legit. What a company receiving the money does with the money invested is secondary to getting a return on investment. For example, Elevation partners vought Facebook shares via secondary markets because they expected the shares to be worth significantly more than the initial purchase price .* The investment never went into Facebook's bank account. * Source -- http://m.techcrunch.com/2010/04/05/source-elevation-partners-got-about-1-of-facebook-for-90-million http://m.techcrunch.com/2010/04/05/source-elevation-partners....
wavephorm 14y ago
They can sell some of their shares to private investors. A VC expects to earn many times their money on the investment... which requires dramatic and risky expansion of the business.
- noahc 14y ago
  Private investors of all types have their own problems. Everyone from the local angel group to friends and family to private equity firms all have advantages and disadvantages. A VC wants 10x, I see no better way to allow this than to let a founder take some money off the table and shoot for the moon. As far as risk is concerned with expansion, as long as the founders and the VC want the same outcome I dont see what the big deal is with taking on more risk, particularly for founders with other peoples money. Even better after theyve taken money off the table!
swombat 14y ago
As far as I know GitHub is very profitable. I'm sure they have taken plenty of money off the table as dividends already.