Quote:
Originally Posted by HarryT
But that's not the case with books. "Venture capitalists" don't - generally speaking, at least - fund the publication of books.
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Correct.
Venture capitalists place
big bets, in the hope of getting big returns.
An old friend, years back, was looking for money to expand his business. He had an established operation that was profitable, and wanted to grow it. He talked to VCs asking for $500,000. He got yawns. I said "You
should have asked for
$5 million! Half a million isn't worth their time and trouble." (Ironically, his business was an early attempt at selling eBooks.)
VCs fund speculative ventures, where the founders are looking for money to grow their business. The dream is that the business establishes itself, gains traction in the marketplace, and will be able to IPO with a high valuation. The VC can then sell their stake, bought low, for a much higher price. The money they make can then be used to fund other ventures.
But like movies, most VC investments don't pan out. The firm either never reaches the point of being able to IPO, or when they do, they don't get the valuation everyone hoped for. In some cases, the VC may tell the founders "You cannot continue as an independent. You need to put yourself on the block to be acquired by a big outfit that wants to be in the business you are in, and it will be cheaper and easier to just buy you than to start from scratch themselves."
And getting VC funding is a devil's bargain. Give enough control to the VC in exchange for funding, and you may find yourself pushed out and replaced by someone the VC thinks can manage the business the way they think it should be run.
I can't think of any VC getting involved in publishing at all. There simply aren't sufficient potential rewards to make them interested.
______
Dennis