The current discussions (December 2008) in Congress and the Press resemble the discussions original investors have about failing companies. How big should the bridge loans be? What are the terms? How deep are the cuts? Are they deep enough? Who's fault is this?
...What happens in a restart? First, existing stakeholders get wiped out; The $7T of ‘new money’ is accomplishing that. Second, management gets changed. November 4 did that. We now have new managers who have a four year ‘vest’ and, probably, a ~100 day cliff.
...A VC Restart would also look for alliance partners to strengthen the offering. Perhaps a merger with another competitor with complementary skills, e.g. China? Merging with China might resemble YHOO+ MSFT – distance and culture conspiring against success. We might also argue about valuation, as there are dramatic differences in growth rates between enterprises. Perhaps a more logical partner would be Canada. Proximity, history, and language work in our combined favor. Canada brings natural resources and we bring ‘value-added processing.’ (We may have to spinoff Quebec to make this work.)
Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports. Email the author at email@example.com