3 ms·

I'm curious: What would be the benefit of doing this? Getting investment from VC's with the hope that it can be turned into something?

by aagha 11y ago

radicalbyte 11y ago
Pump and dump before it goes bang.
InclinedPlane 11y ago
The VC game in Silicon Valley isn't about investment, it's about playing the lotto. You dump money into as many companies that have even a small degree of promise, you blow them up to the point where you can find out whether or not they have market traction, and then you collect your winnings from the tiny fraction that hit it big. Not only is it vastly disadvantageous to not have your fingers in as many pies as possible but the VCs with the most money are precisely the ones who have been playing this game already and hit it big with google, facebook, instagram, etc. Investing in 9 sham companies that fold and 1 unicorn that pays out at 10:1 or 100:1 is more lucrative than investing in 10 companies with modest, but reliable RoI's. Peter Thiel's Facebook investment paid off at 2000:1, Accel's facebook investment paid off at 800:1, Andy Bechtolsheim's google investment paid off at 17000:1, Andreessen Horowitz made 300:1 off of instagram. If you've got a good enough pitch you can get as much money as you want.
- shubhamjain 11y ago
  This makes sense for small investments in companies with valuation < $10 MM but how does one just throw paychecks at valuation ~10B with no significant introspection?
  - InclinedPlane 11y ago
    Theranos' Series C rounds came in at under $30 mil across three different investors. That's chump change in the VC world, if that's the price of a lotto ticket, so be it. If you're a VC who's won the lotto before you likely have over a billion in capital. Pumping $30 mil into 15 ventures doesn't even use up half of it, and if any one of those end up making true on a huge valuation while the others just wander into the desert and die, you'll have made back your lotto expenditures and more.
    - neuronic 11y ago
      Looks like everyone learned their sweet lessons from the dotcom bubble...

I'm curious: What would be the benefit of doing this? Getting investment from VC's with the hope that it can be turned into something?

by aagha 11y ago

I'm curious: What would be the benefit of doing this? Getting investment from VC's with the hope that it can be turned into something?

radicalbyte 11y ago

Pump and dump before it goes bang.

InclinedPlane 11y ago

The VC game in Silicon Valley isn't about investment, it's about playing the lotto. You dump money into as many companies that have even a small degree of promise, you blow them up to the point where you can find out whether or not they have market traction, and then you collect your winnings from the tiny fraction that hit it big. Not only is it vastly disadvantageous to not have your fingers in as many pies as possible but the VCs with the most money are precisely the ones who have been playing this game already and hit it big with google, facebook, instagram, etc. Investing in 9 sham companies that fold and 1 unicorn that pays out at 10:1 or 100:1 is more lucrative than investing in 10 companies with modest, but reliable RoI's. Peter Thiel's Facebook investment paid off at 2000:1, Accel's facebook investment paid off at 800:1, Andy Bechtolsheim's google investment paid off at 17000:1, Andreessen Horowitz made 300:1 off of instagram. If you've got a good enough pitch you can get as much money as you want.

shubhamjain 11y ago
This makes sense for small investments in companies with valuation < $10 MM but how does one just throw paychecks at valuation ~10B with no significant introspection?
- InclinedPlane 11y ago
  Theranos' Series C rounds came in at under $30 mil across three different investors. That's chump change in the VC world, if that's the price of a lotto ticket, so be it. If you're a VC who's won the lotto before you likely have over a billion in capital. Pumping $30 mil into 15 ventures doesn't even use up half of it, and if any one of those end up making true on a huge valuation while the others just wander into the desert and die, you'll have made back your lotto expenditures and more.
  - neuronic 11y ago
    Looks like everyone learned their sweet lessons from the dotcom bubble...