Originally Posted by
fasteddie800
On the face of it though, if I were a venture capitalist, and Boom Technology approached me about funding, I don't understand how it could possibly be an attractive investment. You're building an aircraft manufacturer from the ground up, to develop a product with an incredibly niche market, that will require years of capital investment before you could even hope to turn a profit. Maybe they'll succeed and you'll make money, but aren't there 100s of other, more attractive investments out there?
VC is not looking for safe bets, if that's what they wanted they'd just have Warren manage their money. Also most VC's are really rich guys who can afford to lose what they venture and still be fine. In fact VC groups would typically reject a partner/participant who was bringing too much of his net worth to the table... don't want hard feelings and lawsuits if somebody loses everything they got.
The general idea is that VC invests in multiple lomg-shots and if one of them hits it out of the park, they still come out way ahead.
Also the emotional factor plays with some VC, so thing like climate, social justice, and even cool factor can add to the appeal of a business. SSTs have cool factor. Since their bets are pretty nebulous and non-quantifiable in the first place they can get away with emotion in the mix (that clearly doesn't work well in the financial markets).
Originally Posted by
fasteddie800
This article from Dec 2020 states Boom has raised 210 million, and has a "valuation" of $1 Billion. Not exactly sure how that works, how could a private company be "valued" at $1 Billion, when they've only received $210 million in funding?
Intellectual property counts, and potentially the percieved momentum of a company towards bringing something to market.
Ie, a smart guy in his garage with a patent to accomplish XYZ would have a value associated with the patent.
A functional company with employees, the same patent, and apparent momentum towards production would have a higher perceived value. Having the team assembled counts, and so does the roster (just like a pro sports team).