News You Could Do Without

by Mike Masnick

E*Trade Venture Fund

from the this-is-what-inflated-stock-will-do-to-you dept

E*Trade has decided to go into the venture capital business. They are the latest of a long line of companies with super inflated stock prices to get into this business. While it makes sense as a way to invest your money to get high returns, and possibly to help build complementary technology and services, it's a completely different business *and* it requires the market to remain strong for it to make any long terms sense. I predict over the long haul, many of these corporate venture funds are going to be ditched as huge losses (in money, time, and effort). Though, of course, if E*Trade suddenly decides that Techdirt would be a worthy investment of, say, $10 million or so, I might change my tune. :-)

Reader Comments (rss)

(Flattened / Threaded)

  1. identicon
    Prash, Mar 12th, 1999 @ 2:09pm

    No Subject Given

    I agree with Mike, that these venture funds will be ditched in the long term. I see this as part of the general business cycle of bringing in complimentory-but-not-core businesses, only to spin them off or eliminate them one cash gets tight.

    The entire VC model has come in favor due to its sucess in the technolgy sector. It has worked in a very connected, Silicon Valley-centric, environment. I wonder if the model can be replicated by the new corporate funds. Are there intangible elements that the new funds will not be able to replicate?

    reply to this | link to this | view in thread ]

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