20-30 venture capital firms have been acquired by buyout firms, like The Carlyle Group, annually for the past 5 years.
The buyout firms, under the guise of VC firms, are acquiring startups (many of which haven’t produced much net earnings) at extremely high price tags. These high price tags, which cause the valuation of the startup to go up, allow the VC firms to trade their shares on secondary markets at extremely inflated prices, and generate a large chunk to the bottom-line for the VCs.
What was the inspiration of this post?
This article about a company that has 17 million monthly impressions, little revenue, and a founding member who is starting another similar startup.