4 ms·

> Duggal “was telling investors that Engineer.ai was 80% done with developing a product that, in truth, he had barely even begun to develop.” Due diligence? I

> Duggal “was telling investors that Engineer.ai was 80% done with developing a product that, in truth, he had barely even begun to develop.” Due diligence? I mean, I understand VCs are not the smartest bunch but if you are investing $30M, please do the due.

papito 7y ago
Must be easy money, then.
goatinaboat 7y ago
Remember Pixelon? https://en.wikipedia.org/wiki/Pixelon https://en.wikipedia.org/wiki/Pixelon
manigandham 7y ago
VCs use portfolio theory. Quantity over quality. Due diligence takes too much time, effort and money that can be better spent just getting into another deal.
- perfmode 7y ago
  an apparatus of justification when i played counter strike we called it spray and pray i should call it the portfolio theory of ballistic delivery
- TuringNYC 7y ago
  >> VCs use portfolio theory. I dont buy this argument. I used to help manage a large portfolio. Portfolio theory does not mean that you can put in garbage and magically get more than garbage (actually, it did with CDOs, since they were tranched, but even that ended up tragic if you recall 2008.) Portfolio theory, esp with A-round and beyond VC where your portfolios are smaller (~15 to 30 entities) requires due diligence.
  - manigandham 7y ago
    You don't know it's garbage. Disqualification is easier than qualification. Funds say "no" to the obviously bad or incompatible. Whether something is a "yes" takes research and is never certain. The entire game is picking the winners so how much are you going to dedicate to predicting that (which is massively unpredictable) vs just investing in another shot that may be a winner.
slowhand09 7y ago
Remind me to register Pseudo Venture Capital as a trade name... PVC has a nice ring.
- surelyyoujest 7y ago
  You can get many many nice PVC rings worth more than that startup.
rofo1 7y ago
> I understand VCs are not the smartest bunch but if you are investing $30M, please do the due. Interestingly how nonchalantly you mentioned that. It wasn't the case with me. Elizabeth Holmes/Theranos case opened my eyes that there exist significant amount of people that hold significant capital (millions) and are, hm, not the smartest bunch, as you politely put it. It still somewhat amazes me. You'd think these people were careful, considerate, etc.
- navigatesol 7y ago
  >You'd think these people were careful, considerate, etc. I'm sure that on average, they're capable, intelligent people. But they're also a product of "right-place-right-time", many times they were "nerds" who were of the right age to get ahead of the internet and become filthy rich. Now, many of them believe they have insight to offer on everything, from politics to philosophy. PG has complained about this on Twitter: why don't we listen to these successful people on other topics? Because they aren't as smart as they think they are.
mkagenius 7y ago
Also HN predicted the fraud when it was launched here 9 months ago https://news.ycombinator.com/item?id=18391280 https://news.ycombinator.com/item?id=18391280
mbesto 7y ago
I wrote some details on why or why not VCs do tech DD: https://medium.com/startup-grind/technology-due-diligence-or-lack-thereof-fbeb46687bec https://medium.com/startup-grind/technology-due-diligence-or... > please do the due. In conclusion..it's not your money, so why do you care?
- whamlastxmas 7y ago
  Literally none of the news articles on HN have anything to do with you personally. Why do you read or comment on them?

papito 7y ago

Must be easy money, then.

goatinaboat 7y ago

Remember Pixelon? https://en.wikipedia.org/wiki/Pixelon https://en.wikipedia.org/wiki/Pixelon

manigandham 7y ago

VCs use portfolio theory. Quantity over quality. Due diligence takes too much time, effort and money that can be better spent just getting into another deal.

perfmode 7y ago
an apparatus of justification when i played counter strike we called it spray and pray i should call it the portfolio theory of ballistic delivery
TuringNYC 7y ago
>> VCs use portfolio theory. I dont buy this argument. I used to help manage a large portfolio. Portfolio theory does not mean that you can put in garbage and magically get more than garbage (actually, it did with CDOs, since they were tranched, but even that ended up tragic if you recall 2008.) Portfolio theory, esp with A-round and beyond VC where your portfolios are smaller (~15 to 30 entities) requires due diligence.
- manigandham 7y ago
  You don't know it's garbage. Disqualification is easier than qualification. Funds say "no" to the obviously bad or incompatible. Whether something is a "yes" takes research and is never certain. The entire game is picking the winners so how much are you going to dedicate to predicting that (which is massively unpredictable) vs just investing in another shot that may be a winner.

slowhand09 7y ago

Remind me to register Pseudo Venture Capital as a trade name... PVC has a nice ring.

surelyyoujest 7y ago
You can get many many nice PVC rings worth more than that startup.

rofo1 7y ago

> I understand VCs are not the smartest bunch but if you are investing $30M, please do the due. Interestingly how nonchalantly you mentioned that. It wasn't the case with me. Elizabeth Holmes/Theranos case opened my eyes that there exist significant amount of people that hold significant capital (millions) and are, hm, not the smartest bunch, as you politely put it. It still somewhat amazes me. You'd think these people were careful, considerate, etc.

navigatesol 7y ago
>You'd think these people were careful, considerate, etc. I'm sure that on average, they're capable, intelligent people. But they're also a product of "right-place-right-time", many times they were "nerds" who were of the right age to get ahead of the internet and become filthy rich. Now, many of them believe they have insight to offer on everything, from politics to philosophy. PG has complained about this on Twitter: why don't we listen to these successful people on other topics? Because they aren't as smart as they think they are.

mkagenius 7y ago

Also HN predicted the fraud when it was launched here 9 months ago https://news.ycombinator.com/item?id=18391280 https://news.ycombinator.com/item?id=18391280

mbesto 7y ago

I wrote some details on why or why not VCs do tech DD: https://medium.com/startup-grind/technology-due-diligence-or-lack-thereof-fbeb46687bec https://medium.com/startup-grind/technology-due-diligence-or... > please do the due. In conclusion..it's not your money, so why do you care?

whamlastxmas 7y ago
Literally none of the news articles on HN have anything to do with you personally. Why do you read or comment on them?