4 ms·

I don't see how they can get a return if there is no IPO or acquisition. The main assets of a startup is the technology, the IP, the business plan, the executiv

by mtw 18y ago

I don't see how they can get a return if there is no IPO or acquisition. The main assets of a startup is the technology, the IP, the business plan, the executive team as well as the staff, consumers & customers, which are not liquid. I've heard about specialized stock exchanges for startups (there's one in ontario), but apart from that, i don't see any solution.

ojbyrne 18y ago
Dividends? Though the quote doesn't actually mention large profits, just large revenues.
- fallentimes 18y ago
  Dividends, especially with the current capital gains tax rates, are a wonderful solution. This assumes your investors can be patient enough to receive them.
  - tptacek 18y ago
    Especially if there's no mid-term liquidity event to hasten a startup's ability to actually pay a dividend.
  - jhancock 18y ago
    I think dividends are interesting for certain classes of startups, particularly during downturns. In boom periods, VCs follow the "dumping" principle. Dump your product for free to as many users as possible to get market share and drown out competitors with a lessor war chest. In a downturn, there should be less of this and more opportunity for businesses to focus on traditional evolution; i.e. getting to profits. Perhaps we need a new class of VC to accomplish this. Invest in sizes more like an angel but with clear nearer-term profit agenda.
- mtw 18y ago
  but then, you'd require that startups are profitable, right from their first years, which is hardly the case
  - ajkirwin 18y ago
    Maybe that's because, from what I see, very few startups are EVER profitable. They just get pumped and dumped.
jhancock 18y ago
I think the most meaningful "asset" for a newco is "customers willing to pay for a product or service". For most Internet startups, the tech isn't that novel or patentable. I do not think you need an open exchange to give returns to your investors: "Think Simple".

by mtw 18y ago

ojbyrne 18y ago

Dividends? Though the quote doesn't actually mention large profits, just large revenues.

fallentimes 18y ago
Dividends, especially with the current capital gains tax rates, are a wonderful solution. This assumes your investors can be patient enough to receive them.
- tptacek 18y ago
  Especially if there's no mid-term liquidity event to hasten a startup's ability to actually pay a dividend.
- jhancock 18y ago
  I think dividends are interesting for certain classes of startups, particularly during downturns. In boom periods, VCs follow the "dumping" principle. Dump your product for free to as many users as possible to get market share and drown out competitors with a lessor war chest. In a downturn, there should be less of this and more opportunity for businesses to focus on traditional evolution; i.e. getting to profits. Perhaps we need a new class of VC to accomplish this. Invest in sizes more like an angel but with clear nearer-term profit agenda.
mtw 18y ago
but then, you'd require that startups are profitable, right from their first years, which is hardly the case
- ajkirwin 18y ago
  Maybe that's because, from what I see, very few startups are EVER profitable. They just get pumped and dumped.

jhancock 18y ago

I think the most meaningful "asset" for a newco is "customers willing to pay for a product or service". For most Internet startups, the tech isn't that novel or patentable. I do not think you need an open exchange to give returns to your investors: "Think Simple".