Thank you sir, may I have another?
News.com on what made VC Promod Haque reinvest in a company after sinking a large earlier investment.
Haque, a managing partner with Norwest Venture Partners, was lead investor in Ethernet services company Yipes Communications. All told, Norwest invested more than $50 million starting in 1999. But this past March, Yipes filed for Chapter 11 bankruptcy protection, leaving Norwest owning a lot of worthless ownership certificates.
Haque might have closed the books on a bad investment at that point and just walked away. Instead, Norwest led a syndicate of investors in July to acquire Yipes' network operations and other assets through a newly formed company, Yipes Enterprise Services. Norwest, along with the other investors, funded the new company with a $40.8 million infusion.
What would drive a venture capitalist to reinvest in a company that once wiped out its original investment? CNET News.com recently talked with Haque about why he thinks things are going to work out better the second time around and whether there are any lessons he can share with prospective investors in other start-ups.