"The day the music died..."
What hath venture capital wrought?
dateline 2000: Way too much money chasing to many bad deals. Way too
much money put into marginal or even bad ideas. Insane valuations.
dateline 2002: many, many, many failed startups. everyone is running
scared. M&A has slowed or stopped. IPO's have gone away. Companies
are running out of money and can't sell anything.
We end up in the "last money in wins" scenario. Greed rules.
Fairness and ethical behavior are left for sissies. Money is put
into companies with terms which would have been denounced as ridiculous
in the "good old days".
If I see another company "refinanced" with a last round liquidation
multiplier of 4x and all of the previous shareholders crammed down
into worthless common, I'll puke. Or go postal. It's hard to say.
Certainly all of the angel investors are going to run for cover
because this strategy leaves them with no return after taking
Hey big company CEO's - where do you think those juicy little start ups
come *from*? They come from angel investors, that's where. And later,
the VC's come in. But in the beginning there are only angels. If you
screw the angel investors by buying companies and giving the original
common shareholders nothing, guess what they will do? They will stop
investing. And guess what will happen to your stream of juicy little
start ups? it will go away.
There, I said it.