Planned New Feature: Venture Capitalists

[David]

Planned New Feature: Venture Capitalists

Feature Description
Venture Capitalists with billions of net worth will join the game when this feature is enabled.

Venture Capitalists only invest in companies in pre-IPO rounds. They are committed to long-term investments and do not actively trade stocks.

When using this feature in conjunction with the Realistic Money Supply option, Venture Capital would be an indispensable source of funding when the public investors are lacking cash to invest.

For gameplay balance, when Realistic Money Supply is enabled, the game will automatically assign a minimum of 5 Venture Capitalists to the game. However, if Survival Mode is enabled, then Venture Capitalists can be set to any number.

Why it matters
If it works as expected, it will enable players to use the Realistic Money Supply option without requiring the Survival mode.
(reference: posts from users requesting this: viewtopic.php?f=52&t=7804)

It will also block or reduce the effects of those exploits that recklessly raise funds from the public via issuances of new shares and new bonds.

Its impact on the Banking and Finance DLC
Please note that this feature would replace the Import Company feature as one of the potential extra new features for the Banking and Finance DLC, as it turned out that the fun elements of the Import Company feature did not quite come together.

Status
The development of this feature has just begun. I will post updates as it makes progress.

It is tentatively scheduled for beta release in the next major version 6.6.00 in mid August.

[ohms_law]

Awesome! Thank you!

[standardplayer]

Planned New Feature: Venture Capitalists

Feature Description
Venture Capitalists with billions of net worth will join the game when this feature is enabled.

Venture Capitalists only invest in companies in pre-IPO rounds. They are committed to long-term investment and do not actively trade stock.

When using this feature in conjunction with the Realistic Money Supply option, Venture Capital would be an indispensable source of funding when the public investors are lacking cash to invest.

For gameplay balance, when Realistic Money Supply is enabled, the game will automatically assign a minimum of 5 Venture Capitalists to the game. However, if Survival Mode is enabled, then Venture Capitalists can be set to any number.

Why it matters
If it works as expected, it will enable players to use the Realistic Money Supply option without requiring the Survival mode.
(reference: posts from users requesting this: viewtopic.php?f=52&t=7804)

It will also block or reduce the effects of those exploits that recklessly raise funds from the public via issuances of new shares and new bonds.

I like the Idea of Venture Capitalists I just wonder how you exactly plan to implement it.

Questions/Comments:
*This could be a great way to limit the available supply of investment funds and better disperse company ownership in the game to mirror the real world by forcing firms to compete for a limited supply of investment funds. As well as potentially fixing some company financing exploits.

*You said that Venture Capitalists will spawn with billions of net worth what does that mean? Venture Capital Firms, Individuals, or both? I think that Venture Capital Firms would be best where the CEO/General Partner owns no more than 1%-10% of firm (Starting Net Worth of no more than $100-$200 Million) the rest would be owned by public or private investors like how real world firms are run. Would prefer not to have Individual billionaires just spawn at the beginning of the game.

*Does this mean there will be an option to raise private financing in "Seed" rounds outside the the initial startup funding and IPO's?

*Can Companies at the beginning of a new game that require substantial startup capital to operate including Telecom, Software/Internet, and Financial Firms (Banking, Insurance) start with Equity Owned ~20% or less by Founder and the remaining ~80% split between 4+ different Venture Capital Firms (~20% each). This would fix the issue where the founders of these types of firms start with 100% ownership of firm worth a fortune and never sell their ownership other than 20% issued in IPO.

*Will Venture Capital Firms eventually force the firms they invest in to IPO and then Exit all or part of their investment in a firm after a specified length of time 5-10+ Years like traditional Venture Capital funds? Giving Players and AI the opportunity to Invest in the public stock of those companies.

*Will Company Founders (Individuals or Firms) be able to buy shares back from Venture capital firms at reasonable prices (FMV) and not the ridiculous markups that Founder/CEO's and other investors often want for their shares?

*What do you mean by "It will also block or reduce the effects of those exploits that recklessly raise funds from the public via issuances of new shares and new bonds."? How? Will Companies be required to operate for a minimum number of years before they can issue bonds or IPO say 3-5 years so they have a reliable financial history? They do this in real life and the simulation game wall street raider. See Exchange Qualifications Section: https://www.inc.com/guides/preparing-fo ... gen_2.html

*Will there be an option to limit Player and AI Starting ownership in their company by a dollar value (No more than $1-$10 Million) or percentage (~10%-35%) with the rest being contributed by multiple venture capital firms? Usually people don't start life with millions but, in this game your character and AI can start with 50%-100% ownership of company worth $25+ Million. This would make the game a bit more challenging and would require you to buyback stock or use income from your salary, dividends, or interest income to increase your ownership.

*Will Players be able to participate in Private/Venture Capital Deals?

[Kristo]

Hi,

is it possible for this feature, to have investment funds, consisting of:
1/ money from a venture capitlist (30% for example)
2/ money from a bank (another 30%)
3/ money from the player or other individuals, controled by AI (40%) - if the player wanna buy in!

When a capitalist creates new fund, he'll invest his money, borrow from a bank (Bank DLC must be enabled), and ask other "individuals", including the player if they wanna join him. The fund is controlled by the capitalist and he/she invest as mentioned/planned in this feature. After the target profit is reached, the loan is repaid, the investors receive their money back + small profit (for example 5% of their initial investment) and the rest is for the capitalist.
The fund will have:
- CEO - the venture capitalist
- HQ/base/office in a specific city
- Number of years to be active (to achieve the target)
- The name will come from the three above - for example "John Johnson Paris-20" or "Sam Simpson NY-15"
- minimum sum of money collected in order to start "investing"
- "rating" of the venture capitlist heading the fund, something like skill points, so the player can check if the capitalist is good in investing and how good.
- target profit in mln $
- sum for "buy in", for example - minimum of 5mln a package (who can be sold once a player got them)
- % for profits for investors
(some funds may be available in the begining of the game, other may pop up later)
(if the fund didn't reach the targer profit in the selected time, the fund gets dissolved, and everyone receive % of the money, based on what % they invested in the begining)
(if the fund reaches the target, it sells all assets, and repays the investors, even before the time limit)
(in this case, the rating of the capitalist may increase)

bonus-option: local goverment may also invest in a fund, in this case replacing both the "venture capitalist" and the banks, thus providing larger % profits, but more risky investment as a whole.

// here's an example:
Don Dontson from Chicago, venture capitalist, rating 6/10.
He invests $50,000,000 of his own cash.
Then gets another $50,000,000 loan from bank 123-Captial with interest of 2.5% a year.
Then asks all individuals if they wanna buy in, buying packages, each costing $5,000,000, and sets the profit margin at 7.5% per package. ( $375,000 per package on top of the package prize or $5,375,000 total profit)
The starting capital goal is $200,000,000. If not reach, the fund is "not started"
The time limit is set for 15 years, and the goal is to reach $2,000,000,000 in that time.
The fund is named "Dontson-Chicago-15" and privatelly-own packages can be sold between individuals at all times.

Regards

[standardplayer]

Hi,

is it possible for this feature, to have investment funds, consisting of:
1/ money from a venture capitlist (30% for example)
2/ money from a bank (another 30%)
3/ money from the player or other individuals, controled by AI (40%) - if the player wanna buy in!

When a capitalist creates new fund, he'll invest his money, borrow from a bank (Bank DLC must be enabled), and ask other "individuals", including the player if they wanna join him. The fund is controlled by the capitalist and he/she invest as mentioned/planned in this feature. After the target profit is reached, the loan is repaid, the investors receive their money back + small profit (for example 5% of their initial investment) and the rest is for the capitalist.
The fund will have:
- CEO - the venture capitalist
- HQ/base/office in a specific city
- Number of years to be active (to achieve the target)
- The name will come from the three above - for example "John Johnson Paris-20" or "Sam Simpson NY-15"
- minimum sum of money collected in order to start "investing"
- "rating" of the venture capitlist heading the fund, something like skill points, so the player can check if the capitalist is good in investing and how good.
- target profit in mln $
- sum for "buy in", for example - minimum of 5mln a package (who can be sold once a player got them)
- % for profits for investors
(some funds may be available in the begining of the game, other may pop up later)
(if the fund didn't reach the targer profit in the selected time, the fund gets dissolved, and everyone receive % of the money, based on what % they invested in the begining)
(if the fund reaches the target, it sells all assets, and repays the investors, even before the time limit)
(in this case, the rating of the capitalist may increase)

bonus-option: local goverment may also invest in a fund, in this case replacing both the "venture capitalist" and the banks, thus providing larger % profits, but more risky investment as a whole.

Venture Capital Firms/Funds should not borrow money as they are engaged in funding of new unproven businesses and banks would most likely not lend to an investment firm for that purpose they might lend to the company they are funding if the loans are secured by physical assets.

Private Equity Firms will borrow money to purchase/invest in companies with proven cash flows in leveraged buyouts. They could possibly add Private Equity Firms in addition to Venture capital to invest specifically in these type of deals.

Governments do not typically and should not be investing in venture capital deals unless it is a small portion of the government employees pension funds or it is a defense related company that would create a product for the military (DARPA).

It might be interesting to have a Investment Management firm that is similar to how banking and Insurance works with the HQ and Branches. Investors would Invest a portion of their income each year with the firm and the firm would charge them a percentage (%) fee based on the amount of Asset under management to cover expenses and generate a profit for the owners. The firm then would allocate the available investment funds between:
*Global Stock Equity Index Fund: Market Cap Weighted Index Fund composed of Global Stocks
*Bond Index Fund
*Alternative Investment Funds:
-Private Equity Fund: Invest in Proven Business through Leveraged Buyouts to obtain control and improve operations or non control investments that provide Growth Capital.
-Venture Capital Fund: Invest in Early Stage Firms (Startups)

[David]

The Venture Capitalists feature has been implemented in the latest post-release beta version 6.6.00 which you may download from viewtopic.php?f=10&t=7881

The detailed description about the Venture Capitalists feature is now available at the official Capitalism Lab web site.
You may read it at: https://www.capitalismlab.com/banking-d ... pitalists/

[standardplayer]

The Venture Capitalists feature has been implemented in the latest post-release beta version 6.6.00 which you may download from viewtopic.php?f=10&t=7881

The detailed description about the Venture Capitalists feature is now available at the official Capitalism Lab web site.
You may read it at: https://www.capitalismlab.com/banking-d ... pitalists/

How do you actually raise money from the venture capitalists? I thought the point of this feature was to allow you to raise capital when the public did not have much available but, all it looks like to me is they own shares of a company at beginning of game and maybe fund the startup of new AI firms. I don't see any way to start a fundraising round shouldn't there be an option to create a private placement offer in the financial actions section of you company management where you can offer a ~15%-30% ownership stake to venture capitalists in a early funding round and 5%-10% in later rounds. All I see is Bank Loans, Issue Bonds, and IPO in my private company financial management.

When I buy shares from public shouldn't that amount or at least part of it become free public investor money it does not change at all that does not seem realistic? Also wouldn't a Realistic money supply limit your ability to sell shares so you would not be able to sell your publicly traded shares unless the public or a private investor had the money to buy them. I know that there might be development limitations that may cause this but, maybe there is a solution.

I like how you made the equity ownership of players that start with a publicly traded company fluctuate with the amount of starting capital ranging between 12%-33% it is a lot more realistic than starting owning ~50%.

There still seems to be an issue with Private company ownership. When you start as a Private Company it should be assumed that you would only have somewhere around ~$10,000-$100,000 in savings from working a job for a few years so you would need to seek funding to start your company. You should own no more than 60%-80% at start depending on the amount of starting capital with remainder owned by one or more Venture Capitalists. Right now it appears you own 100% of private company worth millions at the start.

Since you would be starting out with less equity players and AI should be compensated more like executive employees. They should start out getting paid and they should have ability to receive a reasonable guaranteed salary regardless of company profits determined by the companies operating status (Private vs. Public) and amount of capital. Right now players and AI get paid nothing at the start and you have to spend millions to build an HQ that provides little or no return just so you can set your pay. Your salary is also substantially limited by company profits if your company is not making or losing money the most you can get paid is ~$100,000/year. Maybe you could also have a place in UI where you can set your salary without setting up an HQ.

Overall Minimum Salary: ~$60,000-$80,000/year no one should be able to work for free. In California you have to pay exempt executive and professional employees a minimum salary that is typically double the minimum wage. Elon Musk is paid a salary of ~$50,000-$60,000/year because of this California law, Jeff Bezos makes salary ~$80,000/year, etc.

Private Company CEO: you should be paid a minimum salary of around ~$100,000-$300,000/year regardless of profits. After your company goes public you should be paid like a Public Company CEO.

Public Company CEO: you should be paid a minimum salary of around ~$500,000-$1 Million/year because of the "complexity" of running a large public firm. There should also probably be some sort of additional pay at the end of the year like a bonus or equity of around ~$500,000-$4+ Million/year the goal being to make the pay similar to what you have to pay to get Subsidiary CEO's ~$1.5-$5+ Million/year. Most of my Subsidiary CEO's with significant expertise demand $5+ Million regardless of how profitable the company is. The cheapest subsidiary CEOs that have no expertise demand ~$500,000-$700,000/year.

Potential for Addition of Executive Incentive Compensation System:
*Annual Bonus: Could be the traditional percentage of Salary ~100%-200%+ for CEO, ~50%-100% for other company Executives that would be paid at the end of the year on December 31 or January when dividends are paid. (E.g. Salary $1,000,000/year x 200% = $2,000,000 Year End Bonus)

*Equity Grants: Could be a simple multiple of Salary 4-7+ times for CEO, 3-4 for other company Executives the system would issue new shares at the end of the year on December 31 or January when dividends are paid. (E.g. Salary $1,000,000/year x 4 = $4,000,000 Year End Equity/$10 per Share = 400,000 shares). A slightly more Complex system could involve the shares vesting over 4 years and/or requiring you to growing the company by a certain target.

[brianwiz]

Ya it says to me i have over 100 million to obtain but no where can i get that money

[David]

Ya it says to me i have over 100 million to obtain but no where can i get that money

Hi Brian,

Which figure were you referring to? Could you post a screenshot to show it?

[femoral]

Is it possible to add the Public investor' money information below the screen and not in the middle and above? is a little annoying. Or better yet, in the Economic Info Window at the right.