Last week on VC Twitter — Week of August 4th 2019

VCs thank Jerome Powell for forcing LPs to allocate more money to VC

Aug 5, 2019

In SF it is every Patagonia toting venture capitalist’s favorite time of year, Fogust. Here’s what happened last week, there’s some more info about each below:

📉 Fed cuts interest rates

🚔 SEC comes after Rothenberg for $30M in penalties

🥡 Doordash buys Caviar from Square for $410M

🆕 Coatue (hedge fund) starts a $700M early stage fund

💰 Rounds: Wish at $11B + Holloway

Top VCStarterKit Tweets / Replies

let me know how i can be helpful@vcstarterkit

@justGLew VC Twitter is a fundamental component of the VC hierarchy of needs

👨🏻‍💻☕️@hunterwalk

@vcstarterkit "The most powerful pseudonymous tech account since Startup L Jackson" says VC @hunterwalk Newsletter blurbing is the new social proof

Re: Why VCs say “Let me know how I can be helpful”

Maia Bittner (SF)@maiab

So a big part of the reason I say it is to clarify, even though I can’t invest for whatever reason and maybe think their business is shitty now, I think it’s cool that they’re doing a startup and I want them to KEEP GOING. I don’t want my rejection to discourage them.

Leo Polovets@lpolovets

@vcstarterkit Nice post. Very helpful :) Re: "can you introduce me to [big-shot VC]?" It's true that this'll almost never happen, but it's not just b/c it takes a lot of social capital from the investor. It's b/c demand for intros to big-shots is huge, so the bar for intros is way higher.

Last Week on VC Twitter

📉 Fed cuts interest rates

Viewed in isolation, this is probably good for venture fund managers. The median venture capital firm might not have the best track record of producing returns, but when other assets classes are yielding ~2% (10Y Treasury Notes), it’s not hard to see why LPs would choose to allocate more money into venture capital (the median venture fund produces 10-15% IRR).

🚔 SEC comes after Rothenberg for $30M in penalties

This is not looking good. Going off of the Techcrunch article, it looks like investor funds were clearly misappropriated and the SEC is now out for their pound of flesh.

Lesson: Don’t defraud your LPs. You will get caught (eventually) and the SEC will come after you

Chris Fralic@chrisfralic

One of at least 6 incredible quotes from the article... “He raised $45.9 million across six funds from 200 investors but took “fees” on their capital that far exceeded what his firm was entitled to and modified accounting entries to look like investments”

The SEC wants disgraced VC Mike Rothenberg to cough up more than $30 million – TechCrunchNearly three years ago, TechCrunch reported on suspected fraud committed by Mike Rothenberg, a self-described “millennial venture capitalist” who’d made a name for himself not only by eponymously branding his venture firm but for spending lavishly to woo startup founders, includin…techcrunch.com

🥡 Doordash buys Caviar from Square for $410M

You might claim this was a great investment on Square since they acquired Caviar for $90M (in an all stock deal), but when we look at the deal terms and rumors it looks more like Square just wanted to unload the unit.

👨🏻‍💻☕️@hunterwalk

@DelRey @mengxilu @iankar_ Yes. Also, and i have a ton of respect for all parties involved, twitterverse calculating ROI like this forgets that they operated the unit for FIVE YEARS - so the profit or loss from that need to be added in. This is #FakeMath [groan]

🆕 Coatue (hedge fund) announces a $700M early stage fund

Coatue picks up Dan Rose (new hire, former FB) who joins Arielle Zuckerberg (formerly at Kleiner Perkins) and Matt Mazzeo (formerly at Lowercase). This isn’t entirely unexpected, Axios had a scoop on their $500M raise last November.

Jessica Lessin@Jessicalessin

Exclusive: Coatue is raising a monster early-stage fund. I really enjoyed breaking the news and interviewing @thomas_laffont and Dan Rose, who talked about joining the firm after Facebook.

In Ambitious Gamble, Hedge Fund Coatue Launches $700 Million Early-Stage Venture FundIn 1999, Philippe Laffont opened a small tech hedge fund called Coatue that withstood the dot-com bust, thanks to smart investments in companies like Tencent and Apple. Today, he is one of the industry’s hottest managers—with $17 billion under management.Now, Mr. Laffont and his brother Thomas ...theinformation.com

Both their existing team and the investments that the firm have made since look solid.

Will more hedge funds start spinning up early stage funds? Let us know if you are thinking of doing so; we can do bulk shipments of VC Starter Kits so that your team is ready to make early stage investments.

💰 Rounds: Wish at $11B + Holloway raises & releases their guide to raising VC

Everyone’s favorite shopping app, ContextLogic (better known as Wish) raised a fresh round of ~$300M at an $11.2B valuation.