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So, you were assuming that they weren't making a profit based on some sort of gut feeling that they were "still in start-up mode", but you used quite absolute l
by nullymcnull 14y ago
So, you were assuming that they weren't making a profit based on some sort of gut feeling that they were "still in start-up mode", but you used quite absolute language suggesting personal knowledge of the state of their books.
- seanmcdirmid 14y agoWhy the heck would GitHub take $100 million in investment and still push for earning a profit every quarter? Does it make any sense to you? Now you can see why I'm confused.
- chc 14y agoThe idea that taking investment automatically means you would actively forgo earning a profit is kinda odd. You take investment to grow, not because you have an allergy to profits.
- seanmcdirmid 14y agoNot really. Say you take $100 million in finance, so you are now $100 million in debt and you are probably not going to put the money in the bank, but spend it. When you spend (invest) the money, that is taken away from earnings and you can spend more than you earn thanks to the financing. Even if the company's valuation goes up because of these investments, they are still taking a loss now. You have to take a hit now to grow and earn more later. I'm not an accountant, and this is just my uninformed understanding.
- chc 14y ago> Say you take $100 million in finance, so you are now $100 million in debt Venture capital is not a loan; it's a purchase of equity. You are not in debt after taking money.
- seanmcdirmid 14y agoYou are right. But the $100m is not earnings either, and you have to spend it, so your balance sheet is still negative for awhile.
- lukeman 14y agoI get the feeling we don't know why yet.
- mcintyre1994 14y agoSurely that sort of investment is a bet on going public?