Re: Sourcefire makes big mistake

["Dude VanWinkle" <dudevanwinkle () gmail com>]

I know what venture capital is, just had no clue thats what VC stood for

I thought you were tallking about the "bad guys" in the vietnam war

On 10/27/06, Blue Boar <BlueBoar () thievco com> wrote:
> Fergie wrote:
> >  http://en.wikipedia.org/wiki/Venture_capital
> > -- "Dude VanWinkle" <dudevanwinkle () gmail com> wrote:
> > whats a vc firm?
>
> Sorry Dude, I was making too many assumptions about what people know.
> Near Silicon Valley here, everyone knows how venture capital works. ;)
>
> Short version of the story: a high tech company needs money to develop
> their product.  VC firms are in the business of giving money to such
> companies, if they think there is a chance of success.  In order to
> protect their investment, they usually get some level of control over
> the tech company, get seats on the board, and have a say about replacing
> current executives and adding new ones.  And of course they now own some
> portion of the company, however much they paid for.  Usually in the form
> of stock.
>
> Now, VC companies work by giving out lots of money to a lot of
> companies, and hoping for one spectacular success in many 20 companies.
>   That means that 19 companies will fail, and number 20 needs to make
> 20+ times the investment.  About the only way the VC firm will get that
> kind of payback is if the company goes public, or gets acquired.
> Therefore, if you take VC money, they will drive your company towards
> that end.  And you may not fail all the way, the VC may eventually
> decide to cut their losses, a recover at least some of the investment.
> See: Counterpane.
>
>                                         BB
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