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Network of ‘Scouts’ Spreads Money Through Silicon Valley

wsj.com

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Re: Network of ‘Scouts’ Spreads Money Through Silicon Valley

#21

Post by pen2l »

thinkcomp wrote: post #20
pen2l wrote: post #18

Earlier quoted context omitted.

Post is deleted, may I inquire what message is your response to, and who exactly it was in response to?

Here's what he deleted: http://www.aarongreenspan.com/david-ulevitch-deleted-post.pd... I figured that would happen, so I saved it to PDF first.

Jesus you are thorough. By the way Aaron, are you aware that you are rankbanned on this forum? (your posts suffer heavier gravity and quickly fall down on comment threads thereby getting a significantly reduced readership).

Re: Network of ‘Scouts’ Spreads Money Through Silicon Valley

#22

Post by pen2l »

cperciva wrote: post #19

I wonder if it would make sense at some point for VCs to make seed investments at infinite valuations -- that is, taking no equity at all -- in order to obtain information rights. Even if there are no follow-on investment rights attached, having insider information on how well a startup is doing must be worth something... (For legal and tax reasons I'm guessing the "infinite" valuation would instead need to merely be…

> I wonder if it would make sense at some point for VCs to make seed investments at infinite valuations -- that is, taking no equity at all -- in order to obtain information rights. Even if there are no follow-on investment rights attached, having insider information on how well a startup is doing must be worth something...

Somewhat incidentally, I think this is one of the reasons why YC is such a powerful force. YC recently invested in their 1000th startup -- couple that with the many other thousands of applications they've gotten (when you submit an application to YC, you're spilling a lot of beans already about yourself / your startup to YC), all of that put together is quite the house of knowledge. And on top of it all, it owns HN and thus to some extent has the power to frame the prevailing narrative of tech, I think there is no other entity in the world more in tune with the spirit and direction of startups than YC.

Re: Network of ‘Scouts’ Spreads Money Through Silicon Valley

#23

Post by dang »

thinkcomp wrote: post #20
pen2l wrote: post #18

Earlier quoted context omitted.

Post is deleted, may I inquire what message is your response to, and who exactly it was in response to?

Here's what he deleted: http://www.aarongreenspan.com/david-ulevitch-deleted-post.pd... I figured that would happen, so I saved it to PDF first.

On HN, a user has the right to delete what they posted within the deletion time window. It isn't legit for you to bring it back onto the site. Between that and the threat in your comment above (now flagged by users), you're harassing him. That's not allowed here, so please stop.

Re: Network of ‘Scouts’ Spreads Money Through Silicon Valley

#25

Post by cperciva »

dang wrote: post #23
thinkcomp wrote: post #20

Earlier quoted context omitted.

Here's what he deleted: http://www.aarongreenspan.com/david-ulevitch-deleted-post.pd... I figured that would happen, so I saved it to PDF first.

On HN, a user has the right to delete what they posted within the deletion time window. It isn't legit for you to bring it back onto the site. Between that and the threat in your comment above (now flagged by users), you're harassing him. That's not allowed here, so please stop.

While I agree that he's being obnoxious, I'm not sure it's entirely fair to characterize "talk to Congress and the SEC" as a legal threat.

Re: Network of ‘Scouts’ Spreads Money Through Silicon Valley

#26

Post by dang »

cperciva wrote: post #25
dang wrote: post #23

Earlier quoted context omitted.

On HN, a user has the right to delete what they posted within the deletion time window. It isn't legit for you to bring it back onto the site. Between that and the threat in your comment above (now flagged by users), you're harassing him. That's not allowed here, so please stop.

While I agree that he's being obnoxious, I'm not sure it's entirely fair to characterize "talk to Congress and the SEC" as a legal threat.

Now that you mention it, it doesn't matter what kind of threat it was—threatening another user breaks the HN guidelines. I've deleted "legal" above.

Re: Network of ‘Scouts’ Spreads Money Through Silicon Valley

#27

Post by cperciva »

pen2l wrote: post #22
cperciva wrote: post #19

I wonder if it would make sense at some point for VCs to make seed investments at infinite valuations -- that is, taking no equity at all -- in order to obtain information rights. Even if there are no follow-on investment rights attached, having insider information on how well a startup is doing must be worth something... (For legal and tax reasons I'm guessing the "infinite" valuation would instead need to merely be…

> I wonder if it would make sense at some point for VCs to make seed investments at infinite valuations -- that is, taking no equity at all -- in order to obtain information rights. Even if there are no follow-on investment rights attached, having insider information on how well a startup is doing must be worth something... Somewhat incidentally, I think this is one of the reasons why YC is such a powerful force. YC…

I'm sure YC benefits tremendously from the information they've gathered about all the companies they've funded. Probably less so for the applications... I suspect those are incredibly noisy signals and the effort required to extract meaning from them would be prohibitive.

On the other hand, YC Fellowships might be pretty much the "infinite valuation investment" idea I mentioned -- while there's no formal information rights attached, I'm sure they're getting a strong signal for which companies they'll want to fund.

Re: Network of ‘Scouts’ Spreads Money Through Silicon Valley

#28

Post by cperciva »

dang wrote: post #26
cperciva wrote: post #25

Earlier quoted context omitted.

While I agree that he's being obnoxious, I'm not sure it's entirely fair to characterize "talk to Congress and the SEC" as a legal threat.

Now that you mention it, it doesn't matter what kind of threat it was—threatening another user breaks the HN guidelines. I've deleted "legal" above.

That makes more sense, thanks!

Re: Network of ‘Scouts’ Spreads Money Through Silicon Valley

#29

Post by snarf »

thinkcomp wrote: post #9
vadym909 wrote: post #5

I'm not sure if or why this is news? Everywhere you read, VCs say- don't cold call- come through a warm introduction which makes it clear that there are insider groups and people that carry weight. Not necessary that their scout circle has insight into every great idea/company.

There's a pretty significant difference between a warm referral and a kickback, and especially a kickback that makes use of a shell company that disguises from entrepreneurs and other investors the kickback's existence and the origin of the funds used. If it's not illegal, it should be. Investments typically involve disclosure for good reason.

The lack of disclosure that the scouts are agents acting on behalf of Sequoia is definitely wrong, though it is unclear if it's the norm or the exception. However, the shell company that disguises the source of the investment from other investors does serve a useful purpose to the entrepreneur in minimizing signaling risk in the follow on round. If Sequoia invests in your seed round but passes on the subsequent series A, every other investor you're talking to is going to wonder why one of the top VC firms is passing on the investment.
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