

Within the Tech Industry, an Urge to Cash Out - Byliner
http://www.nytimes.com/2011/06/20/technology/20cashout.html?_r=1

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pg
"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.

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rooshdi
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.

~~~
pg
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.

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rooshdi
_Retail investors who do it a la carte are going to net hurt themselves
anyway._

This assumes there aren't any adept retail investors in the public market.
There will still be an increasing number of savvy retail investors who will
now be inhibited from investing in one of the most symbiotically valuable
relationships in an economy, one between young organizations in need of
capital and public investors looking for more relevant early investments.
Instead, the growth of the private markets will dilute these investment
opportunities for the public and now offer them to already rich investors.
Shouldn't organizations and economies work to provide more integral investment
opportunities to the general public instead of increasingly reserving these
for the fortunate few?

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rooshdi
To whoever down voted, I welcome you to reply and support your stance.

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jsmcgd
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?

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mbesto
> _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.

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nkabir
It's outlined in this story: [http://allthingsd.com/20110602/where-did-
groupons-billion-do...](http://allthingsd.com/20110602/where-did-groupons-
billion-dollars-go/)

And here's the SEC filing:
[http://www.sec.gov/Archives/edgar/data/1490281/0001047469110...](http://www.sec.gov/Archives/edgar/data/1490281/000104746911005613/a2203913zs-1.htm#eg79801_related_party_transactions)

~~~
mbesto
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...?

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kinkora
Someone correct me if i am wrong but i believe the money raised wasn't exactly
"capital" per say. From what i've heard, investors for that round were
basically buying stock from the founders. Think of it as a private stock
market or more commonly known as the Secondary Market
(<http://www.investopedia.com/terms/s/secondarymarket.asp>).

Not saying is the most logical thing to do for a company(from an investors
POV) but perfectly legal so long as both sides agree on the transaction and
follow any legal obligations.

