Re:Built to Last vs. Built to Flip
by pchristensen on Wednesday April 16, 2008 @01:41PM
(#165364)
Because liquidity is valuable and cash cows don't live forever. VCs and aggressive investors are looking for big returns, not cash thrown off. If does make me wonder if a VC or angel fund could solicit patient capital, like from a pension fund or life insurance, that would be content with owning dividend-rich stock. That's an area as unexploited as YC's niche was three years ago.
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Re:Built to Last vs. Built to Flip
by kingkongrevenge on Wednesday April 16, 2008 @02:03PM
(#165405)
> are looking for bug returns, not cash thrown off
You can get huge returns from a profitable private company out of owners equity withdrawals over a short period. If the business is not capital intensive there's no real reason to go public, growth market or not.
I see nothing wrong with focusing on the "flip" if the business fundamentally needs a lot of capital or a big parent company. But nobody ever even mentions dividends or buybacks at private valuations. It indicates to me that people are most focussed on taking advantage of a possibly irrational market rather than building real businesses.