dlp@akgua.UUCP (D.L. Philen [Dan]) (03/26/85)
It is fairly easy to invest in start-up companies. There are lots
of them. Investment bankers ar good sources for prospects.
Concern was expressed in tying up money for a long period
as in Merrill. I ask, what is your goal???
Start-ups are HIGH RISK! A start-up is a closely held company
as the founders don't want their hard work and labor stolen.
They pay no dividends, they need the capital for expenses and
growth. You only win when the company goes public (if ever)
and you can sell the stock. Some public companies do not pay
dividends either, i.e. Apple Computer, but Mr. Wosniack (sp?)
just cashed in for 70 M+. Start-ups want control of their
stocks and stockholders. Some have buy-back agreements allowing
you only to sell the stock back to the company, ie. you can't
sell out to a competitor and undermine the founders.
When will a start-up go public so you can cash in. If I knew
that I wouldn't waste time on net.invest. You must be willing
to take the investment money, park it in the company and walk away.
If you can't do that, then stay out! Seven of 10 start-ups
go broke! Your investment is down the tube. For the lure of
high payoff you must take high risk.
Remember, start-up stocks are not publically traded, they have
liquidity only at the whim of the company. You can't trade them
outside. They usually are not registered and thus are not covered by
SEC rules. You in essence GIVE the company working capital. They
give you a piece of paper saying you own part of the company.
That is it. No promised profits, or pay-off date.
Check it out. Get the business plan! Any start-up has to have
one. Analyze the marketing plan and approach. Do your own market
analysis, talk to the lawyers (shutter the thought). Analyze the
funding. Look at the projections for the next five years (they have them).
Then IF you have money you can lock away with no guarantee of return
(even of the initial investment), the business plan is sound,
and everything else is checked out. Plunk down the dough and grab the
paper. Walk away. If you can't do this, then you will never
be able to sleep nights.
I am not trying to paint a gloomy picture, but I know what I
am talking about. I own part of three companies, two my wife and I
founded, and the other my brother-in-law founded. We spent months
doing research, market analysis, cash flow analysis, market projections,
customer markets, etc; the list is seemingly endless. And NO we
have not received one cent of income from them, YET! There is
no free lunch. If start-ups were easy and a sure thing, everyone
would do it.
good luck
akgua!dlpklein@ucbcad.UUCP (04/02/85)
How do you go about investing in one as an individual? Generally these companies are not interested in selling someone a share here and a share there, but look to sell large blocks all at once, hopefully also bringing some other kind of expertise to the table. I have been trying to invest in startup companies by becoming a part of one. I have never heard of a startup selling stock to casual investors outside the company. -- -Mike Klein ...!ucbvax!ucbmerlin:klein (UUCP) klein%ucbmerlin@berkeley (ARPA)