What Constitutes a Prudent Investment?
YouTube is a website that allows users to upload, view, and share video clips. It has become one of the most popular sites on the Internet; more than 6 billion hours of video are watched each month on YouTube. In 2011, YouTube was a $1.3 billion business (Lawler, 2011). But, many observers were skeptical that YouTube had a viable business model and wondered if the Venture Capitalists (VCs) involved got caught up in the hype surrounding YouTube's rapid success. Likewise, Facebook started in a similar fashion and, with its explosive growth and eventual Initial Public Offering (IPO), attracted VCs who decided that it too was worth the investment.
To prepare for this Discussion, locate and review relevant and credible information on the Internet or elsewhere about YouTube, its history, and its business model and/or Facebook, its history, and its business model. Then, find one additional example where venture capital investment was used, either successfully or not.
- Do you think the venture capitalists that funded YouTube or Facebook made a prudent investment? Provide your rationale.
- Offer another example of a venture capital investment that may or may not have been prudent and why.
- Identify the types of criteria you would use if you were a venture capitalist to decide whether to invest and explain why you think those would lead to good decisions.
- What is your assessment of the potential (positive or negative) impact capital venture investments have on business and society either directly or indirectly?