x
<<   <   Page 6 / 8   >   >>
joe_average 12/4/2012 | 11:03:05 PM
re: Hyperchip Lands $43M in Financing Fiberfreak wrote:

>>Hey Skeptic - get out of the '90's dude. Things have changed out there.

You keep mentioning how things "are" and "the way things work". Well life has changed - and the VC's are not in the drivers seat any more.

These days No Way would anyone take more expensive money over cheaper. And VC's do not run the whole show out there, even though they did have a large part in screwing up the economy and our market during the Bubble.

Its all about having a real company now. Not the "spin it up and dump it for the money" mentality of the "good old days".<<

This opinion appears very odd to me. It goes against one of the oldest axioms "The Golden Rule": 'He who has the gold, makes the rules".

VCs supply money, get board seats, set direction.
Management team & founders try and execute on original intent but are fools (and soon unemployed fools) if they ignore the golden rule.

Fiberfreak: You seem to dispute the natural way of business. Clarification?

As for the original intent of the message. Hyperchip got a super sweetheart deal from the government. One that appears to be unique for optical start-ups; at least no one has brought up any similar occurences. It has to be good for Hyperchip in the short term but there are storm clouds on the horizon! They better execute well enough to blow the socks off the VCs for the next time they need money. And, yes, of course they will need more money prior to IPO.
skeptic 12/4/2012 | 11:03:05 PM
re: Hyperchip Lands $43M in Financing You keep mentioning how things "are" and "the way things work". Well life has changed - and the VC's are not in the drivers seat any more.
==================

The VC's are in the drivers seat more than ever
today because its more difficult to get funding
or to raise money than its been in a long time.

When valuations were higher and lots of money
around, companies and management had more power.
But now there isn't much money around and the
VC's are watching a whole lot more closely what
they fund. And what they fund depends on how
they view the company. The things I'm talking
about apply more than ever.
------
Its all about having a real company now.
------

And what that translates to in real life is that
VC's are hanging around startups demanding to
know when they will get to revenue rather than
when they will get to some form of product. But
its the same mentality as before.

They still want to spin it up and dump it as
quick as possible, its just that the criteria
for dumping it now is minimal revenue rather than
having something physically done.


zweisel 12/4/2012 | 11:03:04 PM
re: Hyperchip Lands $43M in Financing Hey, fiberFreak and Skeptic, do us a favour and pick up the phone and stop clogging the postings with juvenile and inane posts.
BigHead 12/4/2012 | 11:03:03 PM
re: Hyperchip Lands $43M in Financing skeptic, anti-dilution protection is
quite common (whereby earlier round investors
will receive more equities if subsequent
investors pay less for their equities).
Examples include full-rachet protection
(based on per share price) or weighted
average protection (based on percentage
of ownership). Perhaps someone else can
verify that (don't think skeptic will take
my word for it).

And you kept mentioning the importance
of lead investors reinvesting. Are you
saying you'd rather give up on the government
loan and dilute your equities in order to
give out better *perception* ?? If so,
good luck when you have your own company !!

Cheers.

skeptic 12/4/2012 | 11:03:03 PM
re: Hyperchip Lands $43M in Financing And you kept mentioning the importance
of lead investors reinvesting. Are you
saying you'd rather give up on the government
loan and dilute your equities in order to
give out better *perception* ?? If so,
good luck when you have your own company !!
--------------


The confidence of current investors is important
because its one of the few ways (before revenue)
to measure the performance of a startup and how
likely that startup is to be successful.
Current investors show confidence by investing
again. They don't get anti-dilution agreements
in the first round and walk away. They dont
tell the company "get it somewhere else" at
the next round.

Now a company will do what it has to in order to
survive (including loans). But don't try to
convince those on the outside of the company
that a government bail-out is a sign of a healthy
company or that VCs only contributing 12 million
dollars to what claims to be a late-state startup
with real product in trials is a sign of someone
doing well.

BigHead 12/4/2012 | 11:03:01 PM
re: Hyperchip Lands $43M in Financing skeptic, thanks for your attempt to educate
us despite the obvious evidence that you have
never worked with a VC. VCs don't try to
get anti-dilution protection ?!?! Who and
where are those VCs ???? I'm sure a number
of people here would love to get in touch
with them !!!

I'm not trying to convince you that HyperChip
is doing superbly, because I have no idea,
and you obviously refuse to hear alternative
opinions. The point of the orignial post
was your logic that anyone who accepted a
government loan is in trouble is absurd.


----- original post
Current investors show confidence by investing
again. They don't get anti-dilution agreements
in the first round and walk away. They dont
tell the company "get it somewhere else" at
the next round.
-----

They would if it's a handsome $30M loan from
the government !!!! Remeber this is their
company too !

Thanks and I'm out.
lurker 12/4/2012 | 11:03:00 PM
re: Hyperchip Lands $43M in Financing Skeptic - I question your remarks..

"If you have not seen it, you may not understand,
but "perception" of a startup in the market
means as much as actual product development.
A great product can be killed by picking bad
initial investors or a bad product (or startup)
can live on through things that would kill anyone
else if they have credible investors who believe
in the company. "
_______________________________

Well connected VCs are extremely important, and look at Hyperchip's pedigree - they have some pretty influential partners.. Amerindo, OCG, Pilgram Baxter, Siemens - these aren't VCs to turn your nose up at.

In an industry where 80 per cent of start up companies are expected to fail - what counts from customers is financing. Hyperchip's agreement with the government gives them the cash to go the distance. Your comment reminds me of young entrepreneurs in 1999-2000 turning up their noses and saying "We won't take 'dumb' money".

Unfortunately, we don't have the same type of options in our state - and its too bad! A repayable loan with the terms mentioned below? It wouldn't have been smart for Hyperchip NOT to take it!

I have asked this once, and I'll ask again - can I have a job at your company??!! No worries about $$, time to post all day.. sounds great!

L

skeptic 12/4/2012 | 11:03:00 PM
re: Hyperchip Lands $43M in Financing skeptic, thanks for your attempt to educate
us despite the obvious evidence that you have
never worked with a VC.
---------------
whoever-you-are,

I'm sorry I wasted so much time trying to explain
things to someone who doesn't want to listen.

I could say the same things over and over to
you (and have been), but its not going to make
any difference. Go back and reread whats already
there.









skeptic 12/4/2012 | 11:02:59 PM
re: Hyperchip Lands $43M in Financing Lurker,

You missed the point: "Credible investors AND
BELIEVE IN THE COMPANY". 12 million dollars of
new money in a late-term startup is not much
belief. And these are equity-diluting loans
(as was mentioned in one of the articles on
the deal). We don't know the scale of it because
hyperchip has never said what the valuation
was in the round.

As far as cash "to go the distance". What
hyperchip has raised will probably last them
less than a year. You can look at the headcount
and guess the burn rate. And its going to be
high.

---------
Your comment reminds me of young entrepreneurs in 1999-2000 turning up their noses and saying "We won't take 'dumb' money".
---------

I watched lots of people in 1999 take dumb money.
The companies are mostly gone now. The people
who took the dumb money at the peak of the boom
got massacred later or they had to give away
the whole company to get more money. There are
exceptions (companies with quick turn-around to
exit) but thats a different class of company
than hyperchip which has a long path to revenue.

And I'm still waiting to hear someone answer
my question about hyperchip's customer "trial"
or what was actually shown at supercomm.

And as far as government's investing in startups
like hyperchip, its totally reckless and should
be discouraged where possible. Governments
subsidizing semi-profitable businesses to keep
a factory open in a particular location or to
keep the business going is somewhat reasonable.
But governments should not be pouring taxpayer
money into something this speculative. At least
in my opinion.

w 12/4/2012 | 11:02:59 PM
re: Hyperchip Lands $43M in Financing Just to try to settle another argument about VC investing. VCs do try to get as much anti-dilution protection as a company will give them, so you have to watch out for that. Typically, though, the anti-dilution protection only works if the price for people investing in a later round is lower than the price at which the earlier round VC invested and only for your the existing shares you own. It does not protect you if the price is higher.

In either case, though, a VC will still be diluted by the very fact that you have to issue more shares in order to sell them to the new investors. If the VC doesn't buy any of these shares, the VC's ownership in the company will be diluted.

This is why most early-stage VCs continue to put money into their portfolio companies except in the latest rounds. Be wary of VCs who don't plan on following on from their initial investment. In hyperchip's case, it seems that most of the investors followed on, so that doesn't seem to be an issue.
<<   <   Page 6 / 8   >   >>
HOME
Sign In
SEARCH
CLOSE
MORE
CLOSE