Do VCs Need A Report Card?
from the good-or-bad? dept
Here's a debate that's been going on for a while. As it stands now, VCs don't really need to disclose how their portfolio companies are doing and can pretty much value the company however they want - until they're gone, sold, or going public. This leads to some vast discrepencies in how different VCs value the same exact company, and that (perhaps) should be a concern to the people who have invested in VC funds. This article calls for a more standardized disclosure process, a VC report card, to help keep VCs honest. I understand the arguments, but I there certainly are downsides to doing things that way as well. As soon as you add in that public report card, you get a Wall Street Effect - where companies will be pressured to do short term things to boost these public numbers. The nice thing about being a private company was that you didn't necessarily have to worry about those things - and could take a longer term view.
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Long term view?
I think startup companies (maybe not good startup companies but the vast majority) are run by "What's the exit strategy" VCs so the sequential quarterly growth is always the most important thing. If any thing the management of non-public companies are even more spineless -- the public shareholders rarely force you out so they can appoint their college buddy.
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