Venture Capitalists and the Economy

As a developer of new technologies for competitive advantage, venture capitalists consulted with me as part of due diligence in determining whether they should invest their limited capital in new start up technology companies. They impressed me with their focus on company and industry fundamentals. They were keen on investing in a venture that would last long term. Then later I became a research analyst for a venture capitalist business. My charter was only to research start ups in my line of expertise. Again, a long term perspective focusing on current and projected fundamentals was the key.

I never encountered a scenario where an investment was considered to purchase a company cheap and quickly sell off assets. Venture capitalists with that perspective are bound to eventually fail. Careful financial and market analytics are critical to growing a venture capitalist business.

My research of Bain Capital suggests that Bain for the most part followed the approach outlined above. Their business model though was more varied. For instance they did invest in companies that were faltering with potential to be turned around. Their successes outnumbered failures. There is no evidence that Bain Capital raided companies just to buy them cheap and shortly sell off assets. The U.S. should have more Bain Capitals that create tens of thousands long term self sustaining jobs.

Above is a short version of my letter that was published in a local newspaper Jan 25.

About economics501

1 - free market Capitalist; 2 - Fitness Entrepreneur; 56 years old, VP at an Investment Bank in NYC, ex Venture Capitalist, happily married with 2 girls. Education: Rutgers and NYU. I allow Ted Hruzd, my friend to blog at will here. He has many posts here. I have known Ted since we were both students at NYU. Ted also works for an Investment Bank as a VP in Equity Global Markets. ------------------------- I was very very Socialist leaning as a 22 year old. I then strongly believed in Gov role in helping the poor. However, as a USDA Child Nutrition Programs, I personally accounted for millions of fraud, abuse, and waste of tax payer money. I came to believe that the poor would be best served with less Gov programs and more with direct aid via tax system. Then after 5 years I became a free market capitalist, was a venture capitalist in 2007 and helped start 2 high tech companies. I dedicate this site to champion free market capitalism as the best road to Prosperity. Please join in. If you disagree, fine, but please post with dignity and class and be civil. Argue with facts always.
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