I'm actually more surprised they didn't already have a venture arm.
Facebook establishing a venture arm to invest in startups
41–50 of 165 posts
Re: Facebook establishing a venture arm to invest in startups
#42I wouldn't take a penny from Facebook. You know they will lock down any patent you create and steal your IP.
Would you take a penny from Softbank?
I wouldn't take a penny from either. It's a wide world with an unprecedented amount of capital in the hands of wealthy investors. There are plenty of funding sources that are neither surveillance monopolists nor government administrations that torture and murder journalists.
Re: Facebook establishing a venture arm to invest in startups
#43It's pretty interesting that FAANG doing venture capital is basically like legal insider trading. They clearly have data on web traffic, consumer usage, advertising spend, etc. that other VC firms and investors generally don't have access to. They can use this to understand entire markets, see who the incumbents are, estimate revenue/users, see who's up-and-coming, etc. Obviously within some margin of error. I wonder…
> Since startups aren't publicly traded, I don't think insider trading laws apply to trading their securities. FAANG is legally allowed to use their access to information to make better investing decisions than other companies are able to Insider trading laws apply to all companies, be them public or private. It is illegal to trade based on undisclosed material information the other party doesn't have - the law doesn…
[deleted]
Re: Facebook establishing a venture arm to invest in startups
#44This will not work. If they are that good with information, they must be building products after products that people will love. Tell me one last known successful launch by Facebook in the last 2 years, outside tweaking their existing products.
Only way it could work is if they share their wealth in other areas / people which must be invested in and will not get enough capital if not for them. Ex: Google Venture - Solar City, Tesla.
But founders have to be fiercely independent and the companies must be independent. Like Elon Musk as founder and Larry / Sergey as investors.
Facebook DNA doesn’t allow that, they are predatory in nature. Trying to diversify by external forces since internal options simply failed. Founders of the companies they acquired, left with very unpleasant experience.
Take their money, if you are ready to be as independent as Elon Musk were and ready to say NO to Zuck when and if you have to.
Re: Facebook establishing a venture arm to invest in startups
#45It's pretty interesting that FAANG doing venture capital is basically like legal insider trading. They clearly have data on web traffic, consumer usage, advertising spend, etc. that other VC firms and investors generally don't have access to. They can use this to understand entire markets, see who the incumbents are, estimate revenue/users, see who's up-and-coming, etc. Obviously within some margin of error. I wonder…
> Since startups aren't publicly traded, I don't think insider trading laws apply to trading their securities. FAANG is legally allowed to use their access to information to make better investing decisions than other companies are able to Insider trading laws apply to all companies, be them public or private. It is illegal to trade based on undisclosed material information the other party doesn't have - the law doesn…
> It is illegal to trade based on undisclosed material information the other party doesn't have
Insider trading laws are designed to criminalize misuse of confidential information, they're not designed to create a fair playing field.
> FWIW, I don't think Facebook actually has a large amount of material data in this scenario - a lot of what they possess (number of active users, platform engagement, etc) is already going to be known by the other party.
Facebook knows how much money widget-makers are spending to promote widget product pages on Amazon.
Re: Facebook establishing a venture arm to invest in startups
#46Earlier quoted context omitted.
> They clearly have data on web traffic, consumer usage, advertising spend, etc. that other VC firms and investors generally don't have access to. I mean, this wouldn't be insider trading since anyone can do their own legwork to get this information. Insider information would be things that aren't (yet) disclosed to the public, not things that can be ascertained through thorough research. > Since startups aren't publ…
> anyone can do their own legwork to get this information Can they though? My point is that FAANG companies are uniquely positioned by having access to this data that the public couldn't possibly have access to.
And hedge funds are uniquely positioned by having a bunch of economists and traders working for them.
The point is it's not considered insider information.
Re: Facebook establishing a venture arm to invest in startups
#47It's pretty interesting that FAANG doing venture capital is basically like legal insider trading. They clearly have data on web traffic, consumer usage, advertising spend, etc. that other VC firms and investors generally don't have access to. They can use this to understand entire markets, see who the incumbents are, estimate revenue/users, see who's up-and-coming, etc. Obviously within some margin of error. I wonder…
That's not really insider trading. Matt Levine pops up here all the time, and one of the really distilled mantras he has: inside trading isn't about fairness , it's about theft . Like the people who track flights to speculate on M&A, or use satellite and aerial imagery to look at parking lots. Gathering information isn't a crime, in fact gathering and acting on that information is explicitly what you want at an aggre…
> track flights to speculate on M&A, or use satellite and aerial imagery to look at parking lots
This is very interesting, got any source or article? Thanks
edit: found this https://www.theatlantic.com/magazine/archive/2019/05/stock-v...
Re: Facebook establishing a venture arm to invest in startups
#48It's pretty interesting that FAANG doing venture capital is basically like legal insider trading. They clearly have data on web traffic, consumer usage, advertising spend, etc. that other VC firms and investors generally don't have access to. They can use this to understand entire markets, see who the incumbents are, estimate revenue/users, see who's up-and-coming, etc. Obviously within some margin of error. I wonder…
[deleted]
Re: Facebook establishing a venture arm to invest in startups
#49This makes sense to me. Facebook knows that consumers are finicky when it comes to social networks and they need to stay on top of the latest fads. Once new social networks catch fire Facebook needs to do anything possible to gain control of them, and venture investing is one way to do that.
Re: Facebook establishing a venture arm to invest in startups
#50If you're competing in any way, building in any part of the social media space, this is an invitation to have your product copied as soon as you see any traction. Facebook doesn't need the money. It's looking for you to do the R&D.
I would guess it's more about the money than you think. Public companies have a fiduciary duty to maximize profits and investor returns. They're simply using the data that's available to them to make great investment decisions to make more money. It seems like a conflict of interest to invest in a company and then turn around and compete with them. If the end plan is to take their ideas once they start becoming succe…
> Public companies have a fiduciary duty to maximize profits and investor returns.
No, they don't. There are many articles on the subject, here is one:
https://www.nytimes.com/roomfordebate/2015/04/16/what-are-co...