4 ms·

Why can't a company worth nearly a billion dollars just go public? There are thousands of public companies worth less than a billion. So why sell your soul to

Why can't a company worth nearly a billion dollars just go public? There are thousands of public companies worth less than a billion. So why sell your soul to a VC who could push you into a situation that could make you implode, rather than raise money on an open market and give up less control?

melvinmt 14y ago
Give up less control with a public company, really?
harryh 14y ago
regulatory issues
- rdl 14y ago
  The implication of VC is that you'll have to sell or go public eventually anyway, so you might as well take the pain and go directly to public if your revenues support it. The general rule being 5 years of $100mm/yr.
  - vulf 14y ago
    When you are just starting out and have no real leverage in the deal, sure. But it sounds like the GitHub guys were the ones holding all the cards in this deal, maybe they made sure the terms of the deal excluded that "general rule".
    - rdl 14y ago
      There is no way a VC would invest if there weren't SOME exit in the future, or at least a convincing story (independent of veracity) told to make it seem that you're open to an exit. The exit could be M&A (although it would have to be $3-5b to be on-target, and in that range, you need to be able to IPO as a credible alternative when negotiating the M&A).
zevyoura 14y ago
They sold ~13% of the company. Compared to going public, I'm pretty sure they're keeping way more control. Also, going public is extremely expensive and time consuming.
pmarca 14y ago
That wasn't really how the Github guys were thinking about their choices, but I'll answer the question as asked... By raising this round privately instead of going public now, they (a) get a financing partner (us) that completely understands what they're about, wants them to realize their vision, will do anything we can to help them get there, and is in the investment for the long run (10+ years), while (b) avoiding all the pressures and issues that come from being public, which are substantial in the modern era.

melvinmt 14y ago

Give up less control with a public company, really?

harryh 14y ago

regulatory issues

rdl 14y ago
The implication of VC is that you'll have to sell or go public eventually anyway, so you might as well take the pain and go directly to public if your revenues support it. The general rule being 5 years of $100mm/yr.
- vulf 14y ago
  When you are just starting out and have no real leverage in the deal, sure. But it sounds like the GitHub guys were the ones holding all the cards in this deal, maybe they made sure the terms of the deal excluded that "general rule".
  - rdl 14y ago
    There is no way a VC would invest if there weren't SOME exit in the future, or at least a convincing story (independent of veracity) told to make it seem that you're open to an exit. The exit could be M&A (although it would have to be $3-5b to be on-target, and in that range, you need to be able to IPO as a credible alternative when negotiating the M&A).

zevyoura 14y ago

They sold ~13% of the company. Compared to going public, I'm pretty sure they're keeping way more control. Also, going public is extremely expensive and time consuming.

pmarca 14y ago

That wasn't really how the Github guys were thinking about their choices, but I'll answer the question as asked... By raising this round privately instead of going public now, they (a) get a financing partner (us) that completely understands what they're about, wants them to realize their vision, will do anything we can to help them get there, and is in the investment for the long run (10+ years), while (b) avoiding all the pressures and issues that come from being public, which are substantial in the modern era.