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Well many companies are profitable (actually, it's the only prerequisite to stay alive). And arguably, Github isn't profitable enough to fuel its own growth, or
by hermanmerman 11y ago
Well many companies are profitable (actually, it's the only prerequisite to stay alive). And arguably, Github isn't profitable enough to fuel its own growth, or they wouldn't need to take $250m from investors in exchange of shares. The question is: is it worth 2 billion dollars? As a developer my guts say yes, but I have no idea what their numbers look like...
- fosk 11y agoWhen you want to reach a monopoly position, fueling growth with only your profits it's not sustainable. They are getting (cheap) money to scale faster than their profits would allow them to do. It's the same reason why Uber, although making billions of revenue, still raises money: cheap money that boosts growth.
- justincormack 11y agoNot necessarily, they may well be profitable (I thought they are) but they may have wanted to sell some shares to get some value out.
- andruby 11y agoLiquidity for the founders, early employees and previous investors can also be a reason to have another funding round.
- djhn 11y agoWhat kind of situations would result in previous investors looking for liquidity? Assuming it is a trade for equity, it would be counter-intuitive do divest a fast-growing company if you are at least risk-neutral, which VCs should be?
- andruby 11y agoNot VC's. But perhaps friends, family or fools who helped on a seed round. Granted, in the case of Github this seems very unlikely.