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November 30, 2005
Want an exit strategy? Just Google it!
You know Google as a search engine company. But those mad-eyed venture capital types - you know, the ones who over-hyped the dot com boom, and, in an obscene feeding frenzy, turned it into a bust? - increasingly see it as the equivalent of the NASDAQ. They're evaluating start-ups on the basis that they might be bought by Google, to fill a gap in its growing portfolio. It's ironic, to say the least, given that Google thumbed its nose at Wall Street, and managed its own IPO via a Dutch auction.
According to Business Week [PAY WALL], Google is resolutely refusing to spend big bucks on the darlings of the venture capital world , having passed on acquiring Skype for instance.
Consequently, the investment vultures are beside themselves with fury, accusing Google of arrogance and disdain for the role they play. Which, having seen the shenanigans they got up to a few years ago, Bleeding Edge tends to equate to that of bloated parasites.
Worse, Google is depriving the sharks of their quarry, because that $120 billion market cap means it can outbid any VC for a start-up. According to Business Week, "That's encouraging entrepreneurs to "bootstrap it" -- go it alone, lean, mean, and cheap, without the help of expensive VCs."
It quotes the view of Baris Karadogan, of US Venture Partners, that Google is creating a whole new ecosystem for entrepreneurs. "Karadogan says he's closely watching a group of entrepreneurs who are designing a highly specialized online advertising tool, hoping to sell it to Google for $50 million. 'Before,' he laments, 'you needed a VC. Now you can build a Linux-based data system for $100,000 and survive long enough to sell without ever raising a venture round.'" Which in our opinion, is great news.
Posted by cw at November 30, 2005 11:03 AM
Comments
It probably won't last but if the bottom feeding scum of the capitalist system actually get burned and don't manage to pass their costs on to the taxpayer we can only applaud, sedition laws permitting.
After all isn't entrepreneurship supposed to be about risk. Not that one would know in these days of public/private partnerships (aka privatise the profits and socialise the losses). Huzzar Google and the logic of the co-operative and non-profit economy.
Posted by: tflip at November 30, 2005 08:07 PM
Venture capitalists can serve other useful purposes apart from providing money. They should have management skills and networks of contacts that can be very valuable for a start-up.
This is not to say that venture capitalist (anymore than anyone else) deserve unqualified support. If you are in a start up you need to be very careful of VCs but don't throw the baby out with the bathwater. Make sure that if you are getting money from a VC you get more than just money.
Posted by: Jeremy Horey at December 6, 2005 12:30 PM