"About half of Bandcamp was laid off today"

Re:"About half of Bandcamp was laid off today" by s1artibartfast on Monday October 16, 2023 @05:02PM (#37906583)

There are a lot of counter-intuitive pre-IPO behaviors. Another one is to raise a huge amount of cash through unnecessary funding rounds.

You would think that massive dilution for no gain would be a bad idea, but there are a lot of usually a lot of perverse incentives at play

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Re:"About half of Bandcamp was laid off today" by ghostbrainalpha on Monday October 16, 2023 @07:22PM (#37908042)

Could you give an example of 1 of the perverse incentives that could cause that? It's very interesting.

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Re:"About half of Bandcamp was laid off today" by s1artibartfast on Monday October 16, 2023 @08:05PM (#37908387)

A lot of the time IPO investors, both public and institutional, value company cash on hand at more than $1 per dollar during an IPO. An extra 500 million in the bank might make the company IPO for a billion dollars more.

Peloton is an example of a company that did a huge unnecessary fundraise before IPO. I'm sure it makes a bunch of numbers and ratios look better on paper. Psychologically, I think it also helps companies lock in evaluation closer to their IPO Target for when people look back at the history of the company.

It's pretty similar too the idea of inflating employee head count. You can say "we made $10 million with only 10 employees last year. Wait until you see how much money you're going to make now that we have a hundred employees"

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