

Pump and Dump Startups Defined - happyhappyfox
http://statemaker.com/saas-sales/pump-dump-startups-451/

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jurymatic
I agree with this article, to an extent, but I think it misses a very
important and rarely discussed point about this strategy:

I don't think we need to characterize these companies as pump-and-dump schemes
(although some are)-- we can give them the benefit of the doubt and say
they're adopting a particular strategy of getting as big as possible by
whatever means possible in order to increase acquisition value. This is an
insanely risky strategy which wholly betrays whatever lip service founders and
their investors have paid to "de-risking" the company in its early days.

Consider the elements of the gamble: 1) An acquirer exists 2) The acquirer has
a reason for wanting to acquire the company 3) The acquirer has the money to
do so 4) The deal will actually close without being scuttled during
negotiations by one of the parties (or the startup's VC's) 5) 1-4 will happen
before the next tech crash 6) As a founder, you will still have enough equity
at the time of (5) for all of it to be financially worthwhile.

If any one of 1-5 goes wrong, you'll be left without a chair when the music
stops.

(6) may fuck you even if 1-5 happen.

