Within the Tech Industry, an Urge to Cash Out

http://www.nytimes.com/2011/06/20/technology/20cashout.html?_r=1

by Byliner • 15 years ago

23 13 15 years ago

pg2• 15 years ago

"Employees have become more interested in selling, in part because companies are taking longer to go public."

More like the other way around. Companies are no longer in such a rush to do public offerings because they can now achieve the same things from a private round.

rooshdi4• 15 years ago

Yes, but doesn't the decreasing importance of public offerings hurt the general public now? Seems like the rich investors of private markets are going to have an ever-growing first-mover advantage in rapid-growth companies while the general public is going to be left with the stagnant or depreciating left overs. This trend may result in an even greater divide between the elite and middle to lower class.

lsc• 15 years ago

this is assuming that the total expected return on those rapid-growth companies is greater than the total expected return on publicly traded companies.

I'm not sure that is the case. For every amazon, there are thousands of pets.com.

Now, amazon did make a whole lot of money, so I could be wrong; compiling reliable statistics from private companies is notoriously difficult. Personally, I think this lack of transparency is going to push the market more towards focusing on getting money from investors rather than on actual profits.

pg2• 15 years ago

Only insofar as index funds buy stock in newly public cos. Retail investors who do it a la carte are going to net hurt themselves anyway. And IIRC not many index funds buy new offerings.

jsmcgd• 15 years ago

Can we not now clearly see that this isn't a 'bubble' (an industry wide overvaluation) but a localised problem? Yes there will be ramifications if the handful of companies like Facebook's value implodes but it won't be typical industry/economy crippling fallout that follows a normal bubble popping. Agree?

mbesto2• 15 years ago

> Out of $946 million that Groupon raised from investors last winter, $810 million went into the pockets of the chief executive, Andrew Mason; the chairman, Eric Lefkofsky; and others.

Really? Anyone have a source to back that up? That seems a bit far fetched.

nkabir• 15 years ago

It's outlined in this story: http://allthingsd.com/20110602/where-did-groupons-billion-do...

And here's the SEC filing: http://www.sec.gov/Archives/edgar/data/1490281/0001047469110...

mbesto2• 15 years ago

I've been reading quite a few threads here on HN about Groupon and never saw this. Crazy!

Isn't the point of raising capital to grow the business? How is putting 80% of the capital into founders equity going to grow the business? Do their brains get bigger with more money?

Also as an investor doesn't the business have an obligation to tell the investor specifically what the capital is being used for? If an exec of a start-up told me that they needed capital so they could pay the founders I'd laugh at them... Am I the only one who is super confused here...?

ry0ohki• 15 years ago

It was pretty widely reported and is in the IPO filing http://www.businessinsider.com/insider-selling-groupon-2011-...

Within the Tech Industry, an Urge to Cash Out

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