And when funding is tiny, it fits into our sense of what risk-taking should be. These are garage/spare bedroom startups with no salaries, a count-the-pennies reliance on AWS to get it going, and an MVP that's "brought to market" via some brave/crazy little scheme that's very dependent on other people's goodwill and tolerance.
If it works, hurray, and if not, everyone regroups fast and moves on.
Multiple all the numbers by 1000x, and the distortions get very strange. Yes, the fund is still making a "tiny bet." But the founders now can goof around with more money than most serious presidential candidates enjoy during primary season. And that feels like a pretty unfortunate misallocation of society's resources.
Unsuccessful startups don't do much damage to society. It's the successful startups that you have to watch out for!
This is exactly the same model as YCombinator. Most of their individual investments fail and this isn't, nor should it be, news worthy.
If you want to cheer on the intelligence of Softbank because they lucked out with an investment in Alibaba early on, you must still hold stock in Yahoo!...
It's very different when you're investing at the seed stage as opposed to putting in what would normally be considered late stage capital. By that point, your valuation should be justified by your numbers, not your dreams.
To paraphrase Everett Dirksen, a few hundred million here, a few hundred million there, and pretty soon you're talking real money.
Seriously though, a silly robot pizza idea that they can't even get to work is something VC's waste 5 million on, but 375 million?
3 thoughts: 1. 375mm is a huge number. 375mm is also 1/3 of 1% of the fund... so small potatoes. Any numbers they throw around are going to look enormous and make great headlines.
2. If some of the investments don't sound a little crazy to you, then what is their differentiation or thesis? Remember PG's essay about good companies often start off sounding like terrible ideas.
3. Yes, anyone that can raise large amounts of money, well, that may be their core strength. Raising money. They need to pair that with someone that can build a team. It's not a bad thing to be able to raise funds.
Every SoftBank funded company must have an army of reporters looking for weakness. One of the cons of getting money too easily I suppose.
That said, I did not / do not understand Wag, and I have 3 dogs and I pay for dog walkers. Against my will, I'm married, she insists. I'm not totally craZy.