by Jason Mendelson January 3, 2007

Do Companies Ever Buy Back VC Shares?

Question: Have you heard of cases where companies buy back shares from a VC, much like buying back shares from a founder? Our Take: Yes, but the situations usually aren’t pretty. If the company has the cash to buy back shares from the VCs (at their cost or above), then the company is doing well […]

Question: Have you heard of cases where companies buy back shares from a VC, much like buying back shares from a founder?

Our Take: Yes, but the situations usually aren’t pretty. If the company has the cash to buy back shares from the VCs (at their cost or above), then the company is doing well and it would be strange to see a VC wanting to sell their shares. Secondly, cash is “king” in startups and there are better uses for companies to make of their money.

Most likely the case is that the company is not doing well, the VCs want out and they are getting a fraction of their investment on the dollar. These are very distressed sales and usually one sees the company or its founders paying the cash and trying to take back the company to restart its efforts.

Note, there are some real serious legal issues regarding tender offers that one must concern themselves with with company-backed buy backs.

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March 7, 2007

Do All VCs Have Degrees From Top Schools?

Question: Do all VCs have degrees from the very top schools? Is it a job requirement? I will graduate soon from an honors program at a state school. The conversation usually goes well when I pitch my background, internship, and areas of expertise then takes a turn for the worse when I say where I […]

January 11, 2007

Are There Any VCs Running Their Firms as a Web 2.0 Business?

Question: Are you aware of any companies or sites that are applying a Web 2.0 approach to Venture Capital? I am envisioning some kind of online war-room with a structured system for inputting data, an RSS feed, an auction type method for VCs to bid on projects, etc. Our Take: While technology VCs make their […]

February 27, 2007

How Do Venture Capitalists Spend Their Day?

Question: I’m curious. I understand that VCs have primarily four functions they perform: raising funds, screening and investing in new businesses, managing current portfolio companies and some level of investor relations and internal operations. How do you divide your work day? What percentage of time do you think you dedicate to each area? Maybe I’m […]

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