Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Newbridge Networks -- Ignore unavailable to you. Want to Upgrade?

To: ricky who wrote (13262)	9/10/1999 5:24:00 PM
From: Ian@SI	Read Replies (1) \| Respond to of 18016

Ricky, The venture capitalists that would have had this opportunity first, and passed it over after doing due diligence, would generally be MBA types or very business experienced; an excellent, if not intuitive judge of business plans, people, and business opportunities. They would also have very current and very thorough understandings of what businesses are succeeding and which are declaring chapter 11. A private placement is only for the most sophisticated of investors because the probability of total loss of capital is highest. IMO, reading a book to get some background, implies that you should definitely look at any money you put into a private placement as an out and out gift with no expectation whatsoever of any return ever. I could be wrong. It happens. Ian.

To: ricky who wrote (13262)	9/11/1999 12:45:00 AM
From: Tommy D	Respond to of 18016

Plenty of risk in the particular business but also beware of the related terms surrounding the shares themselves. Is it a public company or a private company. If it is public, your shares will be subject to a hold period after acquired. the period may depend on the company and what exchange it trades on so your shares will be illiquid for a period of time. Unless you short your position (and that can require significant capital if you are wrong on the direction of the company), tough to get out. If the company is private and looking to go public at some point, risk goes up considerably. Limited market for the shares and likely only at a discount so company has to go public or be sold. Value can be significantly diluted through the issuance of additional shares at 'market value'. You may want anti-dilution rights (ie. the right to acquire proportionate value of new shares to maintain your equity position) but increases your risk. If majority shareholders sell, you may want a piggyback so you get out on same (and hopefully fair terms). If company has limited management, may want insurance on key managers and some right of repurchase (this applies typically in smaller companies). May want to negotiate rights such as additional warrants to increase your equity interest if company goes public. Just a few thoughts about potentially a very complex topic. However, I generally agree with other comments, there must be a much higher return to justify much higher risk. Don't invest if you can't afford to lose it but good luck. TommyD P.S. Wish there was something else to talk about re NN but apologize to all for wandering so far off topic.