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Sequoia’s Roelof Botha warns ‘chumps’ not to buy into SPVs
Sequoia's Roelof Botha apparently sees another greed cycle brewing in venture capital where the least sophisticated investors could get hurt.
SPVs are making a come-back, where the lead investor speaks for less than 10% of the capital, yet eagerly lines up the latest set of tourist chumps who think the story will end differently this time. Botha is specifically warning about special purpose vehicles (SPVs) — a structure that allows a startup’s investor to sell access to a chunk of their shares to others. One person involved in the secondaries markets describes SPV-laden deals like this: “They are passing the hat on all the deals that can’t find enough VC investors and the name firm puts up a tiny amount and these stupid family offices say oh, ‘Andreessen is leading it must be good,’ even though we know that these are their worst companies that can’t raise money from traditional VCs.”
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