Idealab: Invest or Incest?

from the save-yourself-and-pat-yourself-on-the-back dept

As investors wait for Idealab’s IPO, Bill Gross has quietly increased its stake in a couple of its private companies.

Idealab is making these investments because it must own more than 25% of as many of its companies in order to be considered as an operating company rather than a mutual fund in the eyes of Uncle Sam.

The second reason Idealab is making these investments, is to prevent its companies that are desperate for cash from raising money at a lower valuation than what Idealab invested. That would create a loss and with Idealab’s upcoming IPO would not look too favorable in the investment world; especially since the majority of its investments are in B2C companies.

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