Formation of a Company

Formation of a Company - Formation of a Company A Question...

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Formation of a Company
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A Question Why would anyone in his right mind want to start a technology company with the goal of going public?
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First, Some Facts According to Nesheim, who studied technology companies that go public: Chances are six in a million that an idea for a high tech business progresses to an IPO Less than 20% of funded start ups go public Founder CEO’s own about 4% of company at IPO Founder CEO’s stock worth about $6.5 million at IPO (except for Internet stocks)
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More Facts VC’s fund six in 1,000 business plans they receive 50-60% of firms that get VC go bankrupt 30% of firms with VC are merged The 10-15% that succeed in the VC portfolio pay for the failures At IPO, the VP gets about 1/3 of CEO CEO make about $250,000
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More Facts Average time from VC investment to IPO is 3-5 years (with exception of Internet and biotech) A CEO with experience and a complete management team increases probability of success and reduces time to IPO Personal costs are high to entrepreneur and his family
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Personal Costs to Entrepreneur Working hours long but no longer than aggressive manager in large, rapidly growing public company Terror constant companion (fear of failure) Founder CEO’s half life about three years if company sold or new management installed Burnout, heart attacks, marriage problems and divorces no more common
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This note was uploaded on 02/21/2012 for the course ENT 3003 taught by Professor Rossi during the Spring '11 term at University of Florida.

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Formation of a Company - Formation of a Company A Question...

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