3 ms·

Having a Unicorn go bust is akin to having a house get foreclosed on in your neighborhood in 2008. It doesn't reflect kindly on the value of the other homes in

by dev1n 11y ago

Having a Unicorn go bust is akin to having a house get foreclosed on in your neighborhood in 2008. It doesn't reflect kindly on the value of the other homes in the neighborhood.

minimaxir 11y ago
That is one of the reasons why venture capitalists not even affiliated to Theranos had suspiciously optimistic responses to the initial allegations last year: https://twitter.com/joshelman/status/655033793414238208 https://twitter.com/joshelman/status/655033793414238208 https://twitter.com/williamalden/status/658705178523258880 https://twitter.com/williamalden/status/658705178523258880 http://techcrunch.com/2015/11/21/in-defense-of-theranos/ http://techcrunch.com/2015/11/21/in-defense-of-theranos/ (Thanks to Analemma_ above for reminding me of this) The Theranos saga is incidentally one of the reasons I wrote the "You Can't Criticize Startups" rant on Monday. (to be fair, ignoring federal regulations is a different scope than mere criticism.)
- kzhahou 11y ago
  Actually, minimaxir, when the stories first broke a few months ago, it was the rare case where VCs and SV insiders did criticize publicly. Google Ventures (bill Maris), e.g. I can dig up the other examples too.
- dev1n 11y ago
  I saw your post on the front page the other day but didn't have time to read it. I'll check it out. I'm a fan of your other posts. Keep up the solid writing!
- kriro 11y ago
  A related potential signal in the other direction: Draper made it surprisingly clear that they only provided seed money and no further investment. I believe the Theranos founder was friends with Draper's daughter and that makes it an even stronger signal imo (as you usually tend to stick up more for people you're friends with).
danieltillett 11y ago
It is worse for the non-software startups like biotech. With a software startup it normally does not take long for the investors to get an idea if the tech is real or not, but with biotech this can take many years. Biotech investment is based on trust that the scientists are telling the truth. A bad actor in this area can really poison the environment for all other biotech startups - if you can’t trust the scientists then you have nothing.
skewart 11y ago
Perhaps. A VC portfolio full of unicorpses does look kinda like a bad neighborhood. Limited partners might get scared off. Or maybe a good VC firm that also has some huge hits would just explain that they're just swinging for the fences, so sometimes they'll have a spectacular miss or two. Honestly, I can't wait for a few unicorns to fizzle. But only because maybe then the whole "unicorn" meme will finally fade away.

by dev1n 11y ago

Having a Unicorn go bust is akin to having a house get foreclosed on in your neighborhood in 2008. It doesn't reflect kindly on the value of the other homes in the neighborhood.

minimaxir 11y ago

That is one of the reasons why venture capitalists not even affiliated to Theranos had suspiciously optimistic responses to the initial allegations last year: https://twitter.com/joshelman/status/655033793414238208 https://twitter.com/joshelman/status/655033793414238208 https://twitter.com/williamalden/status/658705178523258880 https://twitter.com/williamalden/status/658705178523258880 http://techcrunch.com/2015/11/21/in-defense-of-theranos/ http://techcrunch.com/2015/11/21/in-defense-of-theranos/ (Thanks to Analemma_ above for reminding me of this) The Theranos saga is incidentally one of the reasons I wrote the "You Can't Criticize Startups" rant on Monday. (to be fair, ignoring federal regulations is a different scope than mere criticism.)

kzhahou 11y ago
Actually, minimaxir, when the stories first broke a few months ago, it was the rare case where VCs and SV insiders did criticize publicly. Google Ventures (bill Maris), e.g. I can dig up the other examples too.
dev1n 11y ago
I saw your post on the front page the other day but didn't have time to read it. I'll check it out. I'm a fan of your other posts. Keep up the solid writing!
kriro 11y ago
A related potential signal in the other direction: Draper made it surprisingly clear that they only provided seed money and no further investment. I believe the Theranos founder was friends with Draper's daughter and that makes it an even stronger signal imo (as you usually tend to stick up more for people you're friends with).

danieltillett 11y ago

It is worse for the non-software startups like biotech. With a software startup it normally does not take long for the investors to get an idea if the tech is real or not, but with biotech this can take many years. Biotech investment is based on trust that the scientists are telling the truth. A bad actor in this area can really poison the environment for all other biotech startups - if you can’t trust the scientists then you have nothing.

skewart 11y ago

Perhaps. A VC portfolio full of unicorpses does look kinda like a bad neighborhood. Limited partners might get scared off. Or maybe a good VC firm that also has some huge hits would just explain that they're just swinging for the fences, so sometimes they'll have a spectacular miss or two. Honestly, I can't wait for a few unicorns to fizzle. But only because maybe then the whole "unicorn" meme will finally fade away.