Читать книгу How To Become A Business Angel - Richard Hargreaves - Страница 52

As the ventures develop and ask for more money, there are easy decisions such as how much to invest in a rights issue when the venture is developing well. There are also hard decisions, such as do you invest more in a venture which has missed its plans and needs more money just to survive?

The decision to invest more and still see the venture fail – the good money after bad scenario – clearly lowers returns in a portfolio.

It is always easy to invest more. The company executives argue passionately that they will achieve success with just one more round of investment and the investor wants to believe them or he loses all his investment. The decision is made harder if the investment terms are such that those who don’t invest are effectively diluted to valueless stakes – this is often referred to as the wipe-out or put up or shut up round.