The Real Purpose of Corporate Finance
We in corporate finance and venture finance often lose site of the goals and purposes of what we do.
We can easily see that it does not matter how the money is raised; there must be a fair exchange for the team, for the technology, and for the money.
The real goal of corporate finance is to see that the company has more than enough money to achieve its goals.
Now that we say it, we know it could not be anything else. What else could it be?
In seeing this, we know immediately what venture capital is not.
Real venture capital does not deprive the company of funds so it can be bought for a song later on, taking the work of the team for little or nothing.
Venture capital is not loading the entrepreneurial team down with straightjacket agreements.
Venture capital is not setting a cheap value on the company so you can make a huge gain out of a share of the company that should belong to the people that daily contribute their sweat.
True capital would not keep control of the company to wrest control from those executives who know best how to manage. Capital is not there to know better than management. Management, not capital, is on the firing line and best knows how to achieve the goals of the company.
True corporate finance is seeing that the company has more money than it needs. True venture capital motivates and encourages the team. True venture capital values the team and acts accordingly. True venture capital is part of the team.
True venture capital is more than capital. It is a partnership of equals; it is support that is more than financial; It is on the tam that shoulders the burdens and fights the fights.
Only true venture capital is entitled to share in the rewards of the team.
When a company is adequately financed, the entrepreneurs and their team are not deprived of enough pay to support themselves and their families. They are well rewarded for their work by industry standards. They are not paid little or nothing so the investors can live high.
When a company is adequately financed, it has enough reserves to give it confidence to face any contingency.
When a company is adequately financed, it has the money to acquire the resources it needs to win in a competitive marketplace.
Real finance gives these things to the company.
The real goal of any venture capital is to see that the company has more than enough money to achieve its goals.
About the Author
The author, John Lux, has been an OTC market maker in new issues, shells and other companies, a security analyst, an investment banker, and attorney. He is a principal in several venture companies and private equity funds. You can learn more about venture capital, reverse mergers, going public, raising money and developing a market for your stock at John Lux's website => http://www.asklux.com and you can contact him at lux.investor @gmail.com
Tell others about
this page:
Comments? Questions? Email Here