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There's a pretty significant difference between a warm referral and a kickback, and especially a kickback that makes use of a shell company that disguises from
by thinkcomp 11y ago
There's a pretty significant difference between a warm referral and a kickback, and especially a kickback that makes use of a shell company that disguises from entrepreneurs and other investors the kickback's existence and the origin of the funds used.
If it's not illegal, it should be. Investments typically involve disclosure for good reason.
- deleted 11y ago[deleted]
- snarf 11y agoThe lack of disclosure that the scouts are agents acting on behalf of Sequoia is definitely wrong, though it is unclear if it's the norm or the exception. However, the shell company that disguises the source of the investment from other investors does serve a useful purpose to the entrepreneur in minimizing signaling risk in the follow on round. If Sequoia invests in your seed round but passes on the subsequent series A, every other investor you're talking to is going to wonder why one of the top VC firms is passing on the investment.