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Do you think that VC's should be pulling credit reports or criminal background checks or something, like a bank? (And what would that have accomplished with SBF

Do you think that VC's should be pulling credit reports or criminal background checks or something, like a bank? (And what would that have accomplished with SBF anyway?) Lots of founders don't have good credit, or maybe even any credit at all. Do we really want to make it even harder to raise? There is no "due diligence" that can detect when you've invested in a turkey, or even a turkey that later turns out to have combined funds (perhaps fraudulently) or practiced financial mismanagement to the point that he was bailing out Alameda with FTX funds. That's why you invest in a wide variety of things. FTX is why LPs might be hesitant to invest in Sequoia in the future, but the "variety" part might also be why they don't hesitate, too.

blitzar 3y ago
SBF presented himself as a shit talking bullshitter dosed up to the eyeballs on amphetamines. Not only did Sequoia notice that this was the case, but they loved it and threw as many fistfulls of cash as they could at it.
- gunapologist99 3y ago
  Point taken, but he also presented himself as a brilliant (if slightly psychotic) nerd, which is exactly the archetype that has worked well for Sequoia in the past.
AlexandrB 3y ago
> Do you think that VC's should be pulling credit reports or criminal background checks or something, like a bank? It's funny to use this as some kind of absurd example when in many places this kind of stuff is standard before someone lets you rent an apartment. Isn't vetting founders and their companies before risking the LP's money part of the job for a VC?
- gunapologist99 3y ago
  Of course, it is an absurd example. I'm sure SBF had great credit and no criminal background. Very few founders who would ever catch even the remotest VC interest would have any significant negatives, on paper anyway. SBF was seen as a catch because of his elitist and entrepreneurial background, with two professor parents at Stanford, a background on Wall Street, a hilariously affected backstory about international cryptocurrency arbitrage, crazy ideas on how his future wealth could (and would) save the world, and a later history of donating or bundling crazy amounts of money for his preferred political party (and anyone else in either party or agency that he could perhaps influence with donations). That's why checking credit report or even criminal background is so absurd in this context. Checks like this won't do anything except further entrench the elitist anti-meritocracy that currently infects the VC community. Lots of people can walk into a bank and get a loan, but very few can walk into Sand Hill Road and raise a round of any size.

blitzar 3y ago

SBF presented himself as a shit talking bullshitter dosed up to the eyeballs on amphetamines. Not only did Sequoia notice that this was the case, but they loved it and threw as many fistfulls of cash as they could at it.

gunapologist99 3y ago
Point taken, but he also presented himself as a brilliant (if slightly psychotic) nerd, which is exactly the archetype that has worked well for Sequoia in the past.

AlexandrB 3y ago

> Do you think that VC's should be pulling credit reports or criminal background checks or something, like a bank? It's funny to use this as some kind of absurd example when in many places this kind of stuff is standard before someone lets you rent an apartment. Isn't vetting founders and their companies before risking the LP's money part of the job for a VC?

gunapologist99 3y ago
Of course, it is an absurd example. I'm sure SBF had great credit and no criminal background. Very few founders who would ever catch even the remotest VC interest would have any significant negatives, on paper anyway. SBF was seen as a catch because of his elitist and entrepreneurial background, with two professor parents at Stanford, a background on Wall Street, a hilariously affected backstory about international cryptocurrency arbitrage, crazy ideas on how his future wealth could (and would) save the world, and a later history of donating or bundling crazy amounts of money for his preferred political party (and anyone else in either party or agency that he could perhaps influence with donations). That's why checking credit report or even criminal background is so absurd in this context. Checks like this won't do anything except further entrench the elitist anti-meritocracy that currently infects the VC community. Lots of people can walk into a bank and get a loan, but very few can walk into Sand Hill Road and raise a round of any size.