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Unicorns are setting up their own venture capital funds

bloomberg.com

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Re: Unicorns are setting up their own venture capital funds

#41

Post by burtonator »

AndrewKemendo wrote: post #3

From an operations perspective, this is for Business Intelligence and creating a funnel for acquisitions. Venture is one of the best ways to spot trends in your own market(s), and lead run any future competition with an acquisition, new product or product changes. This is one of the major things that distinguishes major 21st century companies today from major companies in the past. If you know all of the up and comin…

The amount of intel VCs know about the industry is really shocking. I'm super jealous!

Re: Unicorns are setting up their own venture capital funds

#42

Post by wpietri »

atomical wrote: post #31
wpietri wrote: post #18

Earlier quoted context omitted.

Exactly my question. I have yet to see real use cases for blockchains beyond speculation and some light crime. And I think true self-driving cars (SAE Level 5 in specific) are 10-30 years out. But I think there's enough value to be had in lower, more achieveable levels that I expect some of the companies investing in those technologies now will be long-term financial winners.

This sentiment on blockchain is posted very often. Have the authors studied all startups in the top 100 on CoinMarketCap? How about top 500? Yes, we've all met people who read about Bitcoin and Ethereum in the WSJ and felt incredibly smart when both declined from their highs. But what about the ICO money raised in 2018? It's likely over 5 billion at this point.

Ah, the "there has to be a pony in there somewhere" [1] theory.

Am I going to look at every MLM scheme or perpetual motion machine to explain in detail why this new one is just as bad as the rest? No. I looked at a bunch, formed a general impression and a reasonable theory as to why they're all bunk, and have stopped wasting my time.

If somebody has a specific one that they'd like to argue is different I'm willing to listen. But I'm not going to look at 500 supposed startups and figure out the flaws one by one.

[1] https://quoteinvestigator.com/2013/12/13/pony-somewhere/

Re: Unicorns are setting up their own venture capital funds

#43

Post by JumpCrisscross »

sonnyblarney wrote: post #27
AndrewKemendo wrote: post #3

From an operations perspective, this is for Business Intelligence and creating a funnel for acquisitions. Venture is one of the best ways to spot trends in your own market(s), and lead run any future competition with an acquisition, new product or product changes. This is one of the major things that distinguishes major 21st century companies today from major companies in the past. If you know all of the up and comin…

Theoretically what you say makes sense, but I think in practice, it doesn't work as nicely. Corporate M&A can do many of those things already. They have cash. They don't need 'a fund' to do that ... and yet most corporate M&A is a disaster. I wouldn't believe it until I saw it at a large company and then it all clicked and it actually makes sense. M&A & VC teams are considerably more removed from the strategic impetu…

> They don't need 'a fund' to do that

Having dealt with both, there is a difference. Corporate M&A is corporate finance. Their teams come from investment banking backgrounds and are not equipped to evaluate early-stage investments. They therefore don’t get pitched them.

Corporate VCs, on the other hand, exist to evaluate young companies and write small checks. The market know that, and therefore shows them early-stage deal flow. (Whether this be founders pitching directly, competitors mentioning them, or investors or their LPs or lawyers getting chatty.) This flow provides different investment and intelligence opportunities from the corporate finance flow.

Practical example: if you’re pitching corporate M&A, it tends to start with an NDA and a data room full of financial models. If you’re pitching a corporate VC, a one-pager and high-level deal terms can kick directly into negotiations.

Re: Unicorns are setting up their own venture capital funds

#44

Post by JumpCrisscross »

gigatexal wrote: post #9

So Silicon Valley’s version of the CDO or better yet and the even worse — synthetic CDO

> So Silicon Valley’s version of the CDO

Not really.

If by “CDO” you mean “multiple assets in another asset,” then every company is a CDO. If by CDO you mean “tranching,” then pref stacks create (or for that matter, any company that issues debt is) a CDO. CDOs are differentiated by the kind of debt they buy and their tendency for having a tiny senior tranche and leveraged buyers of their riskiest tranches. That doesn’t apply here.

(The latter might apply, since the loss-making unicorns buying start-ups’ equity need to raise new money to stay alive, but that’s just classic leveraged buying.)

Re: Unicorns are setting up their own venture capital funds

#45

Post by atlasunshrugged »

sjtgraham wrote: post #21
asaph wrote: post #8

What happens to the unicorn's equity stake in a unicorn-backed company if the unicorn itself goes out of business? Does that equity get re-distributed to the unicorn's investors?

Seems like an asset that would be liquidated to pay failed co's creditors, preferred stockholders per liq prefs, and common if anything is left.

I think sometimes they get spun into their own legal entity, I'm thinking about Yahoo's and Naspers. In Naspers case their investment in Tencent is worth so much that actually Tencent's value is what drives most of Naspers stock price

https://en.wikipedia.org/wiki/Naspers

Re: Unicorns are setting up their own venture capital funds

#46

Post by fuxufu »

austhrow743 wrote: post #40
gammateam wrote: post #37

Earlier quoted context omitted.

Venture beyond the top 100 on coinmarketcap and you'll see some products that benefit from using a blockchain than not.

I've tried that and didn't find anything.care to share some examples?

Bernstein.io [1] is using it for patent and trade secrets verification. I've also seen an internal system with Merkle-tree-structures to verify digital safety inspections (e.g. that all devices can check the integretity of those checks and no supervisor can "modify" the database)

Re: Unicorns are setting up their own venture capital funds

#47

Post by andy_ppp »

mycall wrote: post #38
andy_ppp wrote: post #35

Earlier quoted context omitted.

In my opinion this is why Microsoft bought github - lots of private repositories of now successful companies to mine when they were startups. Imagine being able to match private repos on Github with successful companies and make early purchases...

This is brilliant idea.

Buy MSFT...

Re: Unicorns are setting up their own venture capital funds

#48

Post by IshKebab »

dclusin wrote: post #24
wpietri wrote: post #18

Earlier quoted context omitted.

Exactly my question. I have yet to see real use cases for blockchains beyond speculation and some light crime. And I think true self-driving cars (SAE Level 5 in specific) are 10-30 years out. But I think there's enough value to be had in lower, more achieveable levels that I expect some of the companies investing in those technologies now will be long-term financial winners.

There's probably a profitable use case in there somewhere for level 4 cars. I'm thinking office parks and corporate campuses. But I share this belief that self driving cars are way over-hyped and aren't going to be here any time soon.

That's what university research and small self driving cars people always say - "it'll be used at airports and campuses" - but in reality there are very few campuses that would benefit, and airports mostly already have internal transit solutions.

Re: Unicorns are setting up their own venture capital funds

#49

Post by mcny »

JumpCrisscross wrote: post #43
sonnyblarney wrote: post #27

Earlier quoted context omitted.

Theoretically what you say makes sense, but I think in practice, it doesn't work as nicely. Corporate M&A can do many of those things already. They have cash. They don't need 'a fund' to do that ... and yet most corporate M&A is a disaster. I wouldn't believe it until I saw it at a large company and then it all clicked and it actually makes sense. M&A & VC teams are considerably more removed from the strategic impetu…

> They don't need 'a fund' to do that Having dealt with both, there is a difference. Corporate M&A is corporate finance. Their teams come from investment banking backgrounds and are not equipped to evaluate early-stage investments. They therefore don’t get pitched them. Corporate VCs, on the other hand, exist to evaluate young companies and write small checks. The market know that, and therefore shows them early-stag…

Do "corporate VC" people have the mindset of a VC in that they're aware that most investments will fail and that's ok as long as a few "moonshots" go really well?

Was Yahoo! buying tumblr an example of corporate VC? How about Facebook buying Instagram?

Re: Unicorns are setting up their own venture capital funds

#50

Post by pluma »

atomical wrote: post #31
wpietri wrote: post #18

Earlier quoted context omitted.

Exactly my question. I have yet to see real use cases for blockchains beyond speculation and some light crime. And I think true self-driving cars (SAE Level 5 in specific) are 10-30 years out. But I think there's enough value to be had in lower, more achieveable levels that I expect some of the companies investing in those technologies now will be long-term financial winners.

This sentiment on blockchain is posted very often. Have the authors studied all startups in the top 100 on CoinMarketCap? How about top 500? Yes, we've all met people who read about Bitcoin and Ethereum in the WSJ and felt incredibly smart when both declined from their highs. But what about the ICO money raised in 2018? It's likely over 5 billion at this point.

If you want to make a case for blockchains, maybe you shouldn't lead with the proven pyramid schemes that are ICOs?

"They ripped off over 5 billion dollars in cash, that means it's not a bubble." Well, doesn't that actually tell you the opposite? That people threw money at obvious scams just because the scams used fancy technology and a buzzword?

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