Silicon Valley Firms Having Cash Showers 123
Carl Bialik from WSJ writes "'The market for high-technology start-up businesses is so intense in Silicon Valley that some companies are being showered with millions of dollars from investors -- without even asking for it,' the Wall Street Journal reports. The home-improvement website Done Right received an email from a well-known investment firm inquiring about putting cash into the company. 'Paul Ryan, Done Right's chief executive officer, says the missive wasn't sent to him or to his executives -- it landed in a general corporate email inbox,' the WSJ reports. 'Mr. Ryan wasn't put off by the impersonal plea: "We're having very good discussions with [the firm] right now," he says, declining to name the potential investor.' The Journal notes that 'pre-emptive' funding is, of course, risky, and harkens back to bubble-year investment trends."
Better than other kinds of showers, I suppose (Score:5, Funny)
Re:Better than other kinds of showers, I suppose (Score:1, Redundant)
Re:Better than other kinds of showers, I suppose (Score:3, Funny)
Cast:
TJ: Prince of Wales
GC: Oscar Wilde
MP: George Bernard Shaw
JC: James McNeill Whistler
JC: Right, Your Majesty is like stream of bats' piss!
All: Whuh!?
TJ: What!?
JC: It was one of Wilde's.
GC: It certainly was not! It was Shaw's!
TJ: Well, Mr. Shaw?
MP: I-I-I merely meant Your Majesty that you shoned like a
shaft of gold when all around is dirt.
All: Oooooh...
TJ: Oh, oh, very witty!
MP: Right! Your Majesty is like a dose of clap!
Changes color with age though (Score:2, Insightful)
Re:Changes color with age though (Score:1)
Re:Changes color with age though (Score:4, Informative)
Not everyone. Many people knew the game ahead of time and had their exit strategy planned. The CxOs had their business insurance. The investment brokers knew how to sell the funds that would ultimately fail to the less priveleged brokers. In the end the money was raked in by the folks at the top while the losses were lumped onto the insurance companies--who then distributed the losses by raising rates on health, auto, and home insurance.
Re:Changes color with age though (Score:2, Insightful)
And since everyone, as in everybody (or at least almost everybody), pays health, auto and home insurance, everyone got burnt.
Re:Changes color with age though (Score:1, Insightful)
Re:Changes color with age though (Score:2)
What kind of business insurance covers bankruptcy?
Re:Changes color with age though (Score:1)
Why Silicon Valley????? (Score:2)
Re:Why Silicon Valley????? (Score:2)
Re:Better than other kinds of showers, I suppose (Score:1)
Re:Better than other kinds of showers, I suppose (Score:2)
Re:It's actually a pretty good deal (Score:4, Interesting)
5% (or 1 in 20) make it giving a 10 fold return = bankruptcy for the venture capitalist.
Perhaps you should spend more time in your math class and less time karma-whoring here?
Re:It's actually a pretty good deal (Score:3, Insightful)
Typically a VC does not win all or nothing.
It is more like in 20 deals:
1 is a big success: *10 and most real (effectivelly freed money) was
done here.
5 deals are huge flop, one of them hurts (it looked good and then failed, so more than seed money was spent).
10
Like most things (Score:3, Informative)
Return on investment for a VC company is dependant on a probability curve.
The cumulative profits of the companies in any given sector follow a probability distribution where small number of companies are stars, a small number are total wash-outs and a big number sits somewhere in the middle.
Depending on the sector (and the status of the overall economy) the curve might me higher or lower with relation with the break-eve
Re:It's actually a pretty good deal (Score:2)
I have been found out, I confess I'm an Eurotrash trying to undermine the US by poisoning the American version of the English Langage.
But anyway resistance is useless, because we have worse than misspelling and gramatical errors in slashdot:
The Européans inventented GSM and SMS (short for Silly Misspelled Sentences) and all your children will bow to the superior power of messy Texting.
--------------
Ha ha
Re:It's actually a pretty good deal (Score:2)
Cheers
Re:It's actually a pretty good deal (Score:2)
You were so quick to insult him that you didn't consider the possibility that not all investments are equal. Why must everybody around here be so quick with the insults? Do they make you feel superior or what?
Re:It's actually a pretty good deal (Score:2, Funny)
Re:It's actually a pretty good deal (Score:2)
Hehe, since when has having mediocre reading skills been considered "interesting"?
The OP said "If even 5% succeed in making an IPO worth 10 fold the investor's buy-in price".
He doesn't say that those not making IPO are 100% loss, in fact he doesn't even say that the other 95% are NOT making IPO.
Instead of your interpretation of the other 95% being a total loss, you could complete his sentence like this: "If even 5% succeed in making an
Re:It's actually a pretty good deal (Score:2)
The 95% * 1000 = 950 is the amount lost on losing ventures.
The 5% * 1000 * 10 = 500 is the amount won on winning ventures.
From that, the rest of your numbers are garbage.
Re:It's actually a pretty good deal (Score:2)
It's also important to consider the advantages a cold-blooded investor has over an entrepreneur. The success of the top 5% is not by any means balanced by the failure of the bottom. Unlike the entrepreneur who has ego tied up the losing enterprise, the venture capitalist can wash his hands of it, effectively limiting his losses, whereas the upside has no limit.
Then suppos
Fear (Score:2, Interesting)
I don't think we are going to see the death throes of the VCs just yet - but there is a certain 'wr
Re:Fear (Score:1)
Re:It's actually a pretty good deal (Score:2)
The great thing about reason.... (Score:4, Interesting)
Re:The great thing about reason.... (Score:2, Insightful)
Re:The great thing about reason.... (Score:2)
Maybe these MBAs are making these new "money shower" investments b
Great. (Score:3, Funny)
Re:Great. (Score:1)
Check your spam filter. I get these offers all the time. Some guy in Uganda...
Money money money (Score:1)
Re:Money money money (Score:1)
What does Tolkien and Lord of the Rings have to do with all that?
Re:Money money money (Score:2)
If you had bothered to read the book you would know that the 802.11s specification stipulates petabyte data rates for ring members, but at the cost of a gradual, but inevitable, packet loss as all requests are slowly redirected to the master or "One" ring, which then acts as a sort of lower layer domain controller or DNS.
Eventually, any and all dns lookups and ip connections, including localhost, are redirected to baraddur.arpa. Or, if Sauron
Why not... (Score:3, Interesting)
Depends upon VC's vision about technology whether it is in phase A or phase C of the famous Hype Cycle [gartner.com]
Re:Why not... (Score:2)
Well ... no shit. Why would any firm with the word "venture" in the name fund a risky untested startup ... insanity, I tell you.
Why don't I get that kind of spam? (Score:5, Funny)
The only ones that deal with money come from widows of late Nigerian presidents. Must be tough to live there when every few days a prez is killed. Kinda makes me want to send our government there, for development aid.
Whether I'm concerned with their or our well being in doing so, is up to the reader.
Re:Why don't I get that kind of spam? (Score:2)
bubble (Score:1)
"dot com 2.0.... beta..."
yeah baby! we havent learned anything from previous dot com's
What we learnt (Score:2)
About the only people that didn't get hurt were those that were able to get big wads of cash out of the system and into other havens. Don't settle for stock options that are years out. Even if the company is based on a solid business model, dot.bomb collateral damage can still wipe you out. Instead, turn your equity into tangible assets ASAP. Don't piss your money against the wall and sign up for huge expenses.
Re:What we learnt (Score:1)
No... stupid people throw other people's money around. Funded mostly by 401(k) funds.
Re:What we learnt (Score:1)
419 scam? (Score:5, Interesting)
"Hi, we am interesting in investing to your company, the money will arrive from my dead uncles account of [insert country here]. We will just be needing $10k to release those funds please thank you. Did I mention that I am a civil servant..?"
Re:419 scam? (Score:2)
I'd say that if the CEO gets asked to meet his supposed benefactors at Amsterdam Schiphol Airport, he should
Re:419 scam? (Score:2)
Re:419 scam? (Score:2)
Remember that 419 dupees often meet "real" people when they get scammed. One guy in a suit looks much like another.
About time too.. (Score:5, Interesting)
Going in the right direction... (Score:2)
Re:About time too.. (Score:2)
Re:About time too.. (Score:2)
Micropayments are a quarter, or a nickle charge.
Re:About time too.. (Score:1)
Re:About time too.. (Score:1)
Re:About time too.. (Score:2)
Winners and losers, the game continues ,losers as always are the ones that comes in late, believing the hype generated by the ones who got in early, even for what are in reality
Re:About time too.. (Score:2)
I believe this is the future too, whether or not that is a good thing is another question entirely. For example, EA is selling smaller and smaller expansions for the BF2 series, which I think will ultimately culimate in them selling a weapon pack. Want upgraded weapons? Pay $5.
Unfortunately, what happens when you can suddenly charge a very small amount for things is that everybody wants to charge for everyt
With "Web 2.0"... (Score:5, Funny)
...we're getting Bubble 2.0 as well.
It is said that economy works in 7-year cycles. Let me be the first to publicly call this "Hype 2.0"
Re:With "Web 2.0"... (Score:2)
Re:With "Web 2.0"... (Score:2)
http://www.google.com/search?hl=en&q=%22hype+2.0%
Re:With "Web 2.0"... (Score:2)
Oh.
Bugger.
Re:With "Web 2.0"... (Score:2)
Great (Score:2, Interesting)
Even then it's tough to get a job if you graduated in the height of the dot com boom and lost your job in the worst of it (especially in small markets like where I live and are in the position I am in - though my personal timing has nothing to do with the
Recovery hasnt even started in the Midwest. (Score:1)
Something this deep will unfortunately require the Midwest to benefit in a similar fashion to what the US did for the Dubai ports deal. Except this time, the Midwest is the benefactor, and
Re:Recovery hasnt even started in the Midwest. (Score:1)
My father was in aerospace and we moved all over the place as jobs migrated from private, miliarty, govt, space, etc. Silicon Valley has one massive caveat that all other startup zones would kill for and that's the VC concentration. For VCs to invest a member of the group generally sits on the board of directors. That means if you're not nearby - you're SOL.
That's also why "Silicon Alley" only comes in as a distant second in any quarters worth of investment (12% vs 40% in the
Constrains eventually allow the company to prosper (Score:3, Interesting)
The money is a burden; a HUGE burden.
When in this situation, be honest with yourself. What will you spend the money on. If you cite PR, furniture, company stationary, etc, run the other way. If you cite "more employees", triple-check your logic to see if they are really needed before taking the money.
"Pigs get fatter, hogs get slaughtered."
-- Jim http://www.runfatboy.net/ [runfatboy.net]
Well if I plead here... (Score:2, Funny)
Please send all your money to the email address on this post and we will give you lots of love
Thanks
Bob
Re:Well if I plead here... (Score:1)
Professor Frink - "Brace yourselves gentlemen. According to the gas hromatograph, the secret ingredient is... Love!? Who's been screwing with this thing?""
Cingely calls it? (Score:5, Interesting)
Re:Cingely calls it? (Score:2, Interesting)
I'm hoping that a bubble is somewhat diffused by sane growth that I've seen inside start-ups to date, but if
Re:Cingely calls it? (Score:1)
Couldn't they just invest the money - in another venture capital fund - and wait till the market picks up? A venture venture capital or a venture capital capital fund (b
Re:Cingely calls it? (Score:1)
Cool... (Score:1)
old news (Score:2, Interesting)
But when companies can make do with 250,000 i
Re:old news (Score:1)
Kent Brockman Says: (Score:4, Funny)
Re:Kent Brockman Says: (Score:2)
I get this kind of email all the time (Score:1)
I also get offers to help me ejaculate like a pron star, and drown my girlfriend in
NO CARRIER
1999 just sued 2006 (Score:2, Funny)
A new gambling strategy? (Score:2, Funny)
Money chasing something safer than RE (Score:2)
Re:Money chasing something safer than RE (Score:1)
I am not an economist either, but I am a small investor. My current strategy is to lock in my the equity from my rental house at a fixed rate and move that money to stocks. Risky? yes. Will Work. Hell Yes. Money has to go somewhere. Invest it in a variety of mutual funds some in the states and some over seas. Most of the money in the world is made by significant sums of leverage. The really risky strategy is to fund your online broker with the funds from your house and then trade on full mar
Well, if you have some spare... (Score:2)
Hey investor-type people with burning hot cash, I've got a few complete games [eveparadox.com] right here [eveparadox.com] that could use a nice cash injection to get me back on it fulltime, employ a 3D model and texture artist with talent (ie. not me) and drop a few crinkleys into advertising. Just waiting to make you some nice easy money...
But I suspect I may have to stick to the tried and true, just gradually build my baby up off of part-t
Re:Well, if you have some spare... (Score:2)
New Silicon Valley Company (Score:2)
it will never end (Score:1)
Money is OK, but sometimes... (Score:2)
But bear something in mind: Investors want something back (profitability, future value, etc. - as well they should), and that something also includes the investor's desire to control the path their investment takes.
In a similar analogy: I'm independent (read: not able to sell any of my music in amounts larger than one or two) and can make any music I want, on any schedu
It is a sad day when... (Score:2)
But then again Mr. Ryan.... my father, the Kinf of Nigeria was improsined. I need to transfer $40,000,000 US out of nation. After examine your credit I have exclusively selected your bank account as trustworthy to move fund.s Please send routing number and account number. For this service you recieve 10 percent bonus....
Re: (Score:2)
Wonderful.... (Score:1)
I saw this first hand last week (Score:2)
I was in San Jose for the VON show last week. I met a VC shopping for used network equipment vendors. Having worked in the aftermarket for a while I'm flat amazed that someone wants to consolidate aftermarket companies.
e-mails from investors? (Score:2)
From an investor's point of view... (Score:3, Interesting)
I read that as "crash showers" (Score:1)
Strangers with Tasty Candy (Score:2, Interesting)
Don't get me wrong. Our product is great, and our users love it - but the attention given to a two-man startup around for such a short period of time was disproportionate to what we had proved to the market at the time.
We decided to hold off on trading a large amount of equity for a relatively small amo
Re:False story for PR purposes (Score:2)
Not at all. VC firms desire controlled privacy - they want to be the one to bring others in or bless announcements.