

Yelp goes public despite losses - moadeel
http://techcrunch.com/2012/03/01/yelp-ipo-wants-to-raise-107-25m-at-a-898-1-million-valuation/

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moadeel
Is it just me (finance background, ent.) or is the IPO scene becoming
unfathomable. Groupon went public despite losses looming in the air (they
tried to cook the books remember?) and now Yelp going public despite it's
history of operating losses. When did it become acceptable by the investors to
invest in companies that have not shown a profitable business model?

It seems like the wall-street investors have become the ultimate VC firm
(willing to invest in unprofitable businesses) without realizing that actual
VC firms invest in unprofitable businesses fairly early in the lifecycle which
warrants their hopes for a turnaround and a potential payoff. But to invest in
unprofitable company years after its founding seems ... well ....
unfathomable, unless investors believe that the company will be able to do
something it hasn't been able to do so far: make a decent profit. Would love
to hear what you guys think.

