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> they basically pick deals based on who else is investing. Another phrase for that is "herd" mentality, which will hopefully result in de-risked "safe" invest
by _hyn3 8y ago
> they basically pick deals based on who else is investing.
Another phrase for that is "herd" mentality, which will hopefully result in de-risked "safe" investing, but VC's are supposed to be looking for true breakout possibilities. If LP's wanted safe, they'd buy Treasury notes.
- rdlecler1 8y agoVCs are looking for breakout returns for investors. A syndicate of top VCs can be a kingmaker event that also discourages other investors from backing would-be startups.
- shanghaiaway 8y agoNow they have an alibi for their herd mentality
- writepub 8y agoThere are huge gains to be had in herd-ing. For instance, if everyone herds towards Uber instead of Lyft, you effectively pick Uber as the winner by merely herding, instead of merit or market economics
- taurath 8y agoAnd in that case, the worst possible outcome is to have many competing funded companies in the same space. Merit doesn’t enter into it much.