venture funding - real purpose of corporate finance

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Real Purpose of

Corporate Finance

Disclaimer

� Stock speculation is very risky

� Do not trade with more than you can afford to

lose.

� Seek professional investment advice.

� This is not investment advice.

� No warranties, you are on your own.

Those of us in corporate

finance and venture capital

can easily forget what we are

there for.

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

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.

It 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.

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Copyright ©John Lux 2011