Tom DeReggi wrote:
Matt, used an example of Vonage, that did not show profits. But if
that were the case with all investments VCs would not be in business.
A certain percentage of them do very well and are very profitable.
Thats what VCs are banking on. Some will be highly profitable. A
company that is highly profitable, and does not sacrifice in other
areas, will most likely sell for higher. Not in all cases, as
profitabilty can be used to mislead the status of a company. For
example if necessary upgrades are bypassed to show higher
profitabilty, when in truth its neglect resulting in reliabilty and
performance being sacrificed. A run down network so to speak. Thats
why I think there is no real answer on how to evaluate a company based
on jsut comparing wether a number is higher than another in one
specific area.
Actually, Vonage is a successful VC investment. They don't have to be
profitable or even survive for very long in the public market, but the
fact that they when public allows the VCs to exit with a large gain,
which is all they care about.
-Matt
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