The Money Behind the Hot Startups | 06/19/2014 | The Motley Fool

TL;DR

Analyzing the involvement of BDСs in startups like Box and Dropbox, their valuation challenges, and potential impact on BDCs.

Transcript

hey fools i'm david hansen today joined by motley fool contributor jordan wath and jordan we're talking the bdc industry and i wanted to get your take on a couple of the bdcs that are involved in the startup world obviously startups ipos have been a hot topic over the last year and a half valuations crazy to some people you may be one of those peop... Read More

Key Insights

• 🧑‍💻 BDСs like Hercules Technology Growth Capital and GSV Capital are heavily involved in tech startups like Box and Dropbox.
• ❓ Valuation challenges arise from the unprofitable nature of startups like Box and Dropbox.
• 🙃 The potential upside and exit strategies for BDСs investing in startups require careful evaluation.

Questions & Answers

Q: How are BDСs like Hercules Technology Growth Capital and GSV Capital involved in startups like Box and Dropbox?

BDСs like Hercules Technology Growth Capital and GSV Capital have investments in Box and Dropbox, with a percentage of their net asset value tied up in these companies.

Q: What are the challenges faced by startups like Box and Dropbox concerning profitability and exit strategy?

Both Box and Dropbox have shown signs of being unprofitable, raising concerns for BDCs holding their investments regarding the potential exit strategy if IPOs don't materialize.

Q: Why should investors scrutinize the net asset values of BDСs investing in tech startups?

Investors should carefully evaluate the net asset values of BDСs investing in tech startups due to the challenges in valuing assets like servers and the potential impact of unprofitable investments on BDCs.

Summary & Key Takeaways

• BDСs like Hercules Technology Growth Capital and GSV Capital are involved in startups like Box and Dropbox, with a significant portion of their net asset value tied to these companies.

• Both Box and Dropbox have shown signs of being unprofitable, raising concerns for BDCs holding their investments.

• Evaluating the potential upside and exit strategy for BDCs investing in tech startups requires cautious scrutiny due to the nature of assets and valuation challenges.