Fundraising Acceleration Is the New VC Investment Thesis

Re:Fundraising Acceleration Is the New VC Investment Thesis by nostrademons on Sunday November 02, 2014 @06:03PM (#8548474)

This is also called the "efficient market hypothesis", and is a cornerstone of basic equity valuation. The idea is that if you have information that a company's stock is sure to rise in the future, it is rational for you to pay any amount up to the point at which you believe it will be valued in the future to acquire it now. And so the stock price will instantly reflect all public information about the future prospects of the stock.

You may call it "dumb money", but if so, then all money is dumb.

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Re:Fundraising Acceleration Is the New VC Investment Thesis by hawkice on Sunday November 02, 2014 @08:15PM (#8548886)

Grandparent mentions "greater fool theory", which is perhaps a clearer counterpoint to your (quite correct) point.

It's also worth saying that upside risk is typically coupled with downside risk (which is something you're hinting at) -- the wider market has the probability of failure built into its current pricing. So, somewhat perversely, even if you don't think it'll have a billion dollar valuation with probability exceeding that of the market, it can become a better investment simply by increasing the probability of > $0 outcomes (by reducing that downside risk). Demonstrating that with a pivot seems like actually good evidence.

I wouldn't make the same investment, but there are a couple angles to discuss here.

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