Venture Capitalists Getting Nasty

from the fighting-over-the-scraps dept

It seems the venture capital world is turning quite nasty these days (NY Times, registration, blah blah). With the IPO window still not really open, VCs are demanding more and more onerous terms from companies they invest in. They’re doing the best to take all the risk out of their investments – despite their whole reason for being: to be the risky capital. They’re also getting meaner with each other, forcing out older investors and suing each other over unexpected dilution. Update: This story goes well with the saga of, who apparently forced most of their original investors to take a complete bath with this latest round.

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Comments on “Venture Capitalists Getting Nasty”

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SB says:

Idiots and their money are soon parted.

the only VC’s left are the lemming idiots. The real VC”s cashed out , and NEVER looked back. You know who they are. Only the idiots are left trying to squeeze blood from a stone .. the STOCK mania is OVER, and you do NOT invest in new companies in a recession. Idiots and their money are soon parted.

Anonymous Coward says:

Re: Idiots and their money are soon parted.

Didn’t you ever learn the basics of investing. Buy low, sell high. This is a great time to be doing investing , particularly in new companies. The price of stock is low and the room to grow is high. What you don’t want to do is buy stock in new companies in good times.

Mike (profile) says:

Re: Re: Re: Idiots and their money are soon parted.

No, you invest BEFORE the bubble, or during (providing you take profits, and cut losses)

You don’t invest AFTER a bubble.. There is NO upside left. Are you an idiot?

This is getting interesting. I’m not asking in an insulting way (and, since you clearly think I’m an idiot, let’s just assume this is one of my idiot questions). How do you know the difference between what’s “before” the bubble, and what’s “after” the last bubble?

Because, based on what you’re saying, then (if I’m reading you correctly, and clearly, I’m not) no one should have invested in the dot com bubble, at all, because it was after the PC bubble. So, I’m not sure I follow how one avoids investing after a bubble, but still gets in before the next bubble.

SB says:

Re: Re: Re:2 Idiots and their money are soon parted.

I never claimed to know when to invest. Al I said is NOT NOW.

We are in a recession. Your venture investments are now 500 times more likely to fail. And you are 500 times LESS likely to get a cash-out, stock IPO to dump on the sucker public.

Therefore, this is NOT the time to invest. If I knew when the RIGHT time to invest IS, I wouldn’t be ranting like a stupid pig on this message board.

Good luck.

Rick Colosimo (user link) says:

Nothing new under the sun.....

This article is about two years old, judging by the “trend” it’s describing. All of these terms, participating preferred, multiples of X liquidation preferences, antidilution adjustments, etc., were in the various venture deals I worked on in 1999.
The ability for a prior investor to get washed out was always known, obvious, and a specific concern for investors as well as the company’s management/founders. Antidilution adjustments define how many “extra” shares the investors will get in a down round (and you can do the math to model it, if you’re so inclined). Each series/class of stock has specific rights regarding future changes in terms of selling new shares, giving new rights, or losing old rights. WYSIWYG is the watchword of contract law.
The real story, if there is one, is really in the shift in the terms of the antidilution adjustments proposed by VC’s. The more onerous constructions indicate either greater pessimism about future values (not likely, since a VC would seldom knowingly invest in a loser) or a realization that investments were more exposed to downside risks than VC’s had previously believed. (That means that no one ran the spreadsheet calculations down to a 90% decrease in value, or that everyone underestimated that risk.)

SBEater (user link) says:

Idiots are too quick with their opinions

SB, you’re a flipping idiot / troll. In your first comment you state “you do NOT invest in new companies in a recession”

And in a later comment you state “No, you invest BEFORE the bubble, or during”

Well Einstein, a recession almost always preceeds a bubble, so go home and do some studying you overopinionated undereducated obnoxious moron.

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