From: Antoun Nabhan (antoun@arrayex.com)
Date: Wed Oct 18 2000 - 19:59:21 PDT
At 02:47 PM 10/2/00 -0400, Linda wrote:
>"These incubator companies operate on the assumption of a healthy
>new-issue market," says Meckler of internet.com. "The whole incubator
>model hinges on the ability of going public. When this doesn't happen,
>serious problems can arise. There wouldn't be an incubator concept in
>today's market."
Huh? The model hinges on the ability to realize cash liquidity for the
incubator through IPO *or* *sale* or IPO of the portfolio companies. By
Meckler's logic, there shouldn't be any VC, or for that matter, any
rational entrepreneurship in this market.
And if starting a company makes sense at all, then incubators have
portfolio theory on their side, just like the VCs do - but with the ability
to buy even lower (earlier stage) and sell just as high. Alternately, you
can think of incubators as the '00s version of the 60s and 70s horizontally
integrated conglomerates. Multiple not-necessarily-related lines of
business, centralized administrative infrastructure and capital raising.
Probably a good variation on the theme - more accountability is one nice
feature - even if some incubators out there aren't all that well-run or
well-thought-out.
Oh, and to make up for how far behind I am on FoRK reading, I should
mention that I think amihotoraminot.com is the most addictive thing I've
seen since word.com's Sissyfight thing. :-)
Antoun Nabhan
VP of Finance, Arrayex, Inc.
617.901.8871
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