• Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint
Share this Page URL
Help

Chapter 8. Building to Flip > Talking Points

Talking Points

Venture firms were not slow to see the financial opportunities created by the public's interest in the Internet and by loose credit conditions. To take advantage of the situation, VCs changed their own internal rules regarding the quality of companies they would support and how fast they would push a company towards an IPO. In general, they chose the wrong people to back, pressed upon them mistaken strategies, chose the wrong method of exit from their investments, and erred in the aftermarket support they gave the companies which they'd taken public. One incentive was that the IPO is one of the few ways an investor can exit an investment quickly. In fact, some companies were “built to flip,” or built solely for the purpose of being sold to the public, even if there was not a strong business model in place but simply brand recognition with a management team that could do a good road show. In the end, many good companies were lost in the bubble as they could no longer get funding once investors had soured to this prospect. Other companies realized the game was over, and that they could no longer succeed in the new market. In Germany, a company even returned money unspent to its investors, rather than string out its existence for as long as it could.


PREVIEW

                                                                          

Not a subscriber?

Start A Free Trial


  
  • Creative Edge
  • Create BookmarkCreate Bookmark
  • Create Note or TagCreate Note or Tag
  • PrintPrint