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a16z, Accel, and now Sequoia have become hedge funds. And Tiger and other hedge funds have started doing VC investments. Interesting bundling and unbundling of

a16z, Accel, and now Sequoia have become hedge funds. And Tiger and other hedge funds have started doing VC investments. Interesting bundling and unbundling of the industry.

boringg 5y ago
a16z hedge fund? Please explain.
- qeternity 5y ago
  Basically a crypto hedge fund.
- thesausageking 5y ago
  a16z restructured themselves into an RIA and is no longer a VC fund according to the SEC. By giving up the VC fund exemption, they have to follow the regulatory rules for hedge funds including background checks for employees, many more disclosures, 13F filings, etc. They did it because the change lets them to invest in public company stock, buy secondaries, buy crypto tokens, etc.
  - mannymanman 5y ago
    So all the 'Crypto Funds' they've been raising recently are not for investing in crypto companies, but to trade tokens?
    - thesausageking 5y ago
      Most crypto funds are not structured as VC funds for exactly this reason.
eldavido 5y ago
"Venture Capitalists are just hedge fund managers who can quote the Tibetan Book Of The Dead." — Taylor Mason, Billions, Season 3: Flaw in the Death Star.
eigthbits 5y ago
Exactly. “This is a fundamental disruption to the venture capital model.” should be read as "We are now a hedge fund like Tiger, Coatue, et al."
kornish 5y ago
Good op-ed in The Information about this exact topic: https://www.theinformation.com/articles/the-end-of-venture-capital-as-we-know-it?rc=cxwxin&shared=cd9508f7a638fa64 https://www.theinformation.com/articles/the-end-of-venture-c...
CalChris 5y ago
I don't think what a16z is doing, a crypto hedge fund, is similar to what Sequoia is doing here with its Sequoia Fund, a mutual fund of post-IPO portfolio companies. Indeed, I don't see this as a hedge fund, a limited partnership of investors that uses high risk methods, such as investing with borrowed money, in hopes of realizing large capital gains. Generally hedge funds are private investments. Sequoia Fund is an open-ended liquid portfolio made up of public positions in a selection of our enduring companies. They even calls themselves a mutual fund. Sequoia Fund is a mutual fund that has been advised by Ruane, Cunniff & Goldfarb L.P. since its inception on July 15, 1970. Mutual, not hedge.
- govg 5y ago
  Hedge funds aren't really private investments, you're probably thinking of Private Equity firms. Hedge funds more often than not invest in the public markets and hold large positions, the difference between a mutual fund and a hedge fund is more regulatory and legal than investment process.
  - mbesto 5y ago
    AFAIK hedge funds are basically anything you want them to be. You could be hedging public equities, shorting them all, going long on them all, or investing in crypto. I could be wrong but its basically a catch-all term now.
    - caminante 5y ago
      The parent is responding to the grandparent comment > Generally hedge funds are private investments. I take your point that HFs come in many flavors. And, "private investments" is ambiguous. Though, in "general", the parent is right to say the claim (above) is not accurate. I think of HFs as "generally" playing with securitized, public assets, regardless of investment mandate.
    - govg 5y ago
      Yup, you're right. Nowadays a "hedge" fund is simply some entity that manages money and dabbles in the dark arts to generate outlandish returns (or collapses in a spectacular fashion). I was just refuting the initial assertion that hedge funds make private investments, since most of the traditional "hedge funds" don't touch private markets, and work in public markets.
streetcat1 5y ago
Right. the VC arbitrage is disappearing. However the gate keepers are still there. This just impose search and transaction cost on founders with no benefits to the company . I envision the next steps to be: 1. Startup ETF for pre exit companies. 2. Stock exchange for startups.
- runnerup 5y ago
  I'm sure people would want to have an ETF for pre exit companies in the same way that they'd like to have a NYSE without SEC oversight. I'm pretty sure there are rules which involve "looks like a duck, quacks like a duck, legally it's now a duck" which make it hard to trade pre-exit companies with any kind of useful liquidity.
  - 2arrs2ells 5y ago
    Sohail Prasad (YCS12) is building a publicly traded for privately held startups! https://www.wsj.com/articles/fund-to-let-retail-investors-bet-on-early-tech-startups-11634216400 https://www.wsj.com/articles/fund-to-let-retail-investors-be...
- xvilka 5y ago
  Stock Exchange for private companies already exists[1] but it doesn't look very useful for people outside. What I think would be revolutionary is something between angel investment and stock market clients. [1] https://cartax.com/ https://cartax.com/

a16z, Accel, and now Sequoia have become hedge funds. And Tiger and other hedge funds have started doing VC investments. Interesting bundling and unbundling of the industry.

boringg 5y ago

a16z hedge fund? Please explain.

qeternity 5y ago
Basically a crypto hedge fund.
thesausageking 5y ago
a16z restructured themselves into an RIA and is no longer a VC fund according to the SEC. By giving up the VC fund exemption, they have to follow the regulatory rules for hedge funds including background checks for employees, many more disclosures, 13F filings, etc. They did it because the change lets them to invest in public company stock, buy secondaries, buy crypto tokens, etc.
- mannymanman 5y ago
  So all the 'Crypto Funds' they've been raising recently are not for investing in crypto companies, but to trade tokens?
  - thesausageking 5y ago
    Most crypto funds are not structured as VC funds for exactly this reason.

eldavido 5y ago

"Venture Capitalists are just hedge fund managers who can quote the Tibetan Book Of The Dead." — Taylor Mason, Billions, Season 3: Flaw in the Death Star.

eigthbits 5y ago

Exactly. “This is a fundamental disruption to the venture capital model.” should be read as "We are now a hedge fund like Tiger, Coatue, et al."

kornish 5y ago

Good op-ed in The Information about this exact topic: https://www.theinformation.com/articles/the-end-of-venture-capital-as-we-know-it?rc=cxwxin&shared=cd9508f7a638fa64 https://www.theinformation.com/articles/the-end-of-venture-c...

CalChris 5y ago

I don't think what a16z is doing, a crypto hedge fund, is similar to what Sequoia is doing here with its Sequoia Fund, a mutual fund of post-IPO portfolio companies. Indeed, I don't see this as a hedge fund, a limited partnership of investors that uses high risk methods, such as investing with borrowed money, in hopes of realizing large capital gains. Generally hedge funds are private investments. Sequoia Fund is an open-ended liquid portfolio made up of public positions in a selection of our enduring companies. They even calls themselves a mutual fund. Sequoia Fund is a mutual fund that has been advised by Ruane, Cunniff & Goldfarb L.P. since its inception on July 15, 1970. Mutual, not hedge.

govg 5y ago
Hedge funds aren't really private investments, you're probably thinking of Private Equity firms. Hedge funds more often than not invest in the public markets and hold large positions, the difference between a mutual fund and a hedge fund is more regulatory and legal than investment process.
- mbesto 5y ago
  AFAIK hedge funds are basically anything you want them to be. You could be hedging public equities, shorting them all, going long on them all, or investing in crypto. I could be wrong but its basically a catch-all term now.
  - caminante 5y ago
    The parent is responding to the grandparent comment > Generally hedge funds are private investments. I take your point that HFs come in many flavors. And, "private investments" is ambiguous. Though, in "general", the parent is right to say the claim (above) is not accurate. I think of HFs as "generally" playing with securitized, public assets, regardless of investment mandate.
  - govg 5y ago
    Yup, you're right. Nowadays a "hedge" fund is simply some entity that manages money and dabbles in the dark arts to generate outlandish returns (or collapses in a spectacular fashion). I was just refuting the initial assertion that hedge funds make private investments, since most of the traditional "hedge funds" don't touch private markets, and work in public markets.

streetcat1 5y ago

Right. the VC arbitrage is disappearing. However the gate keepers are still there. This just impose search and transaction cost on founders with no benefits to the company . I envision the next steps to be: 1. Startup ETF for pre exit companies. 2. Stock exchange for startups.

runnerup 5y ago
I'm sure people would want to have an ETF for pre exit companies in the same way that they'd like to have a NYSE without SEC oversight. I'm pretty sure there are rules which involve "looks like a duck, quacks like a duck, legally it's now a duck" which make it hard to trade pre-exit companies with any kind of useful liquidity.
- 2arrs2ells 5y ago
  Sohail Prasad (YCS12) is building a publicly traded for privately held startups! https://www.wsj.com/articles/fund-to-let-retail-investors-bet-on-early-tech-startups-11634216400 https://www.wsj.com/articles/fund-to-let-retail-investors-be...
xvilka 5y ago
Stock Exchange for private companies already exists[1] but it doesn't look very useful for people outside. What I think would be revolutionary is something between angel investment and stock market clients. [1] https://cartax.com/ https://cartax.com/