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On Thu, Dec 14, 2006 at 11:17:24AM +0000, Aaron Trevena wrote: > On 14/12/06, Henry Bremridge <henry.bremridge@xxxxxxxxx> wrote: > No, you are not selling them the company, they are investing in a > share of the company - same as if you IPO, but with only a very small > number of shareholders, in return for the higher risk, they get a > disproportianately high share for their money, and a seat on the > board. Not control. That's how it is supposed to work, unfortunately > many VC will push their luck and generally use the threat of > withdrawing their funding or vetoing further investment, etc - general > bullying tactics to get their way. Seen it happen, never beneficial to > either party. The difference with an IPO is that with an IPO you control most of the shares. A VC will try and get into the position whereby all major decisions need to be approved by the VC. In such a circumstance, you have lost control of your company for the reasons you have mentioned. Getting a VC to take a minority stake is difficult. > > > Take for example RedHat: I still do not understand that company's > > business. Microsoft I can understand but not RedHat. As an example I > > note Oracle's decision to start selling linux software and support (or > > did I read that wrong) > > Pretty simple really - what do you think IBM, HP and Novell make their > largest margins and have their most expensive staff doing (other than > R&D) - consultancy, which is supporting and related 'value add'. > > Redhat (and previously ximian) sell subscriptions to their > upgrade/support packages - Microsoft have been trying to do this for > years but haven't had the success of Redhat - why would they do that - > because it's more profitable than big bang releases every few years. > Tks > It's so hard to meet with VC that these middlemen get VC and VC > seekers together, kind of like dragons den, but without the macho > posturing and with real money instead of a tiny sum smaller than > remortgaging your house. > the amount of work is similar, but you can invest more money in a larger company than a smaller one. There were recent press reports that a £50bn deal for one company would be done soon and £100bn within a few years. There is a LOT of money about Small companies need angel investors as opposed to VCs. (different terminology). I believe they are called angel investors because finding them is hard. > My friends did a couple of these, and pretty much every VC had a box > they needed to tick for their portfolio (we need a company that does > X), nothing to do with the quality of presentation or business plan. > > Also read James Dyson's book for more about how VC in the UK was > bloody awful - he had a good idea, minimal risk and couldn't secure VC > or Bank loans and like pretty much anyone who has succeded in > kick-starting a business in the UK had to borrow heavily against his > home and invest every penny and moment he had. > You could argue that the only reason he made it was because the VCs would not finance it. Which means that anyone else who was interested in something similar also could not get finance.
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