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How different is dumping Groupon stock by pre-IPO investors (who really know what's going on inside the company) and large investment banks selling over-valued

by antr 15y ago

How different is dumping Groupon stock by pre-IPO investors (who really know what's going on inside the company) and large investment banks selling over-valued MBS? None. Large cap VCs are no different to Wall Street, and they want to make us believe otherwise.

wpietri 15y ago
I think the important difference between VCs and Wall Street is that the MBS stuff was obvious chicanery with a terrible societal cost. They might as well have been stuffing horse manure into sausage casings and selling it as all-beef hot dogs. I grant that Groupon is pretty dubious, but the other upcoming tech IPO candidates I know about have actual solid businesses. I think VCs don't generally play the "greater fool" game, if only because it doesn't work well at their timescales. MBSes were very liquid, and the organizations making them had ways of selling them off quickly. For VCs, on the other hand, the median time from initial investment to exit is something like 7 years; that's a long time to wait hoping that nobody sees through the bullshit.
- antr 15y ago
  I partly agree with your argument, specially on the liquidity side. Having said that, Venture Capital is one of the riskiest investments, and they wan't to make outside investors feel as if these companies are Treasury Bonds. VCs should be less selfish and admit that raising Series A, B or C does not validate a business and it's ability to become a great company. An it specially does not validate ridiculous valuations in the Stock Market. Just watch Jeff Clavier's interview in Blooomberg, it's simply embarrassing: http://www.bloomberg.com/video/74892006/ http://www.bloomberg.com/video/74892006/ IPO investors should sue any pre-IPO investor going on national TV arguing how great their investment is, and later dumping the stock. Just listen Jeff's argument and count the number of "if". He is just making a bunch of excuses of why Groupon is great, all conditional to god know what kind of number of hypothetical events. This is acts are dangerous, selfish and immature, as they damage the Startups' image to society.

by antr 15y ago

wpietri 15y ago

I think the important difference between VCs and Wall Street is that the MBS stuff was obvious chicanery with a terrible societal cost. They might as well have been stuffing horse manure into sausage casings and selling it as all-beef hot dogs. I grant that Groupon is pretty dubious, but the other upcoming tech IPO candidates I know about have actual solid businesses. I think VCs don't generally play the "greater fool" game, if only because it doesn't work well at their timescales. MBSes were very liquid, and the organizations making them had ways of selling them off quickly. For VCs, on the other hand, the median time from initial investment to exit is something like 7 years; that's a long time to wait hoping that nobody sees through the bullshit.

antr 15y ago
I partly agree with your argument, specially on the liquidity side. Having said that, Venture Capital is one of the riskiest investments, and they wan't to make outside investors feel as if these companies are Treasury Bonds. VCs should be less selfish and admit that raising Series A, B or C does not validate a business and it's ability to become a great company. An it specially does not validate ridiculous valuations in the Stock Market. Just watch Jeff Clavier's interview in Blooomberg, it's simply embarrassing: http://www.bloomberg.com/video/74892006/ http://www.bloomberg.com/video/74892006/ IPO investors should sue any pre-IPO investor going on national TV arguing how great their investment is, and later dumping the stock. Just listen Jeff's argument and count the number of "if". He is just making a bunch of excuses of why Groupon is great, all conditional to god know what kind of number of hypothetical events. This is acts are dangerous, selfish and immature, as they damage the Startups' image to society.