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Biotech / Medical : Microcide Pharmaceuticals (MCDE)
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To: John O'Neill who wrote (147)2/3/1998 12:39:00 PM
From: Mark Adams  Read Replies (1) of 186
 
Like yourself, I'm rather new at the game when it comes to recently public companies. In the past, what I've seen happen is the Venture funds, formed of by a group of large net worth investors, will finance companies for equity prior to the company going public.

At some time after going public, the Fund distributes shares of company which it's financed to it's original investors, who can then either continue to hold or sell their shares, paying taxes on the gains. Usually these gains are 10x, to compensate for the high risk of startups.

There might be a thread which discusses how venture capital works, but I've not looked for it. BTW, it looks like the sellers overwhelmed the MM yesterday- the buyers weren't ready for/aware of the increased supply. Today is looking healthier.

You might want to take a look at the thread at Message 3330051
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