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I was incredibly confused to read "Investors are writing off their $800,000 investment". Sure, $800K isn't huge money for a fund, but it still seems... odd... t

by alex_c 6y ago

I was incredibly confused to read "Investors are writing off their $800,000 investment". Sure, $800K isn't huge money for a fund, but it still seems... odd... to be so nonchalant about it? Then I checked General Catalyst, they manage multiple funds in the $500M - $1B range[1]. In that context the $800K really is a rounding error, around 0.1% of a single fund's size. It never ceases to amaze me how money stops being money past a certain amount (which would be life-changing for most people), and just becomes numbers to move around. [1] https://www.crunchbase.com/organization/general-catalyst-partners/investor_financials https://www.crunchbase.com/organization/general-catalyst-par...

cj 6y ago
I imagine there must be a bit more to the story. It's not common for investors to write off $800k out of good will (doesn't seem like something in the best interest of their LPs). Edit: > It’s a really exciting day here at Baremetrics! I’m stoked to announce that General Catalyst has invested $500,000 in Baremetrics, as part of a new fund they’ve created for businesses on Stripe. Turns out there is more to the story. Baremetrics got their cash from a fund specifically intended to promote companies integrating with Stripe. In other words, the goal of the fund was to promote Stripe moreso than to generate returns for LPs
- alex_c 6y ago
  Ahh good find, and according to CrunchBase that Stripe fund was $10M total. That makes a bit more sense now.
- csomar 6y ago
  So they invest in a company and then they invest in a bunch of companies to raise the turn-over of the first company. Seems legit.
- pkrotich 6y ago
  Interesting - I truly expected Stripe to buy Baremetrics.
PeterisP 6y ago
It's not that they had an option to collect that $800k in some way - I'd presume that their share in the company was objectively worth much less after all these years, and the only difference that some hardball squeezing might make would be that they get a chance to write off, say, just $500k instead of $800k but more likely just block the deal so that nobody gets anything.

by alex_c 6y ago

cj 6y ago

I imagine there must be a bit more to the story. It's not common for investors to write off $800k out of good will (doesn't seem like something in the best interest of their LPs). Edit: > It’s a really exciting day here at Baremetrics! I’m stoked to announce that General Catalyst has invested $500,000 in Baremetrics, as part of a new fund they’ve created for businesses on Stripe. Turns out there is more to the story. Baremetrics got their cash from a fund specifically intended to promote companies integrating with Stripe. In other words, the goal of the fund was to promote Stripe moreso than to generate returns for LPs

alex_c 6y ago
Ahh good find, and according to CrunchBase that Stripe fund was $10M total. That makes a bit more sense now.
csomar 6y ago
So they invest in a company and then they invest in a bunch of companies to raise the turn-over of the first company. Seems legit.
pkrotich 6y ago
Interesting - I truly expected Stripe to buy Baremetrics.

PeterisP 6y ago

It's not that they had an option to collect that $800k in some way - I'd presume that their share in the company was objectively worth much less after all these years, and the only difference that some hardball squeezing might make would be that they get a chance to write off, say, just $500k instead of $800k but more likely just block the deal so that nobody gets anything.