How do these kinds of deals affect existing institutional investors? Are they going to see their stakes diluted when the debt converts?

So is this a usual trend with companies seeking IPO in the future?

There is nothing usual about private companies raising $4b.

I meant raising money from Goldman Sachs' private wealth management clients specifically, I think the OP implied there was a pattern.

Can you expand on this?

That's the way you get rich. Make apps, social networking..stuff like that. Or invest in already-successful, viral app companies like Uber, Snapchat, Tinder, etc. Why anyone would go the brick and mortar route is beyond me. I would rather invest $100k in successful web 2.0 companies (like the ones I listed) and double my money in 6 months than start a crappy regular business which has a 50% chance within five years of totally failing and taking all my money with it. Like the Dire Straits Song Money for Nothing, except it's apps and web 2.0 instead of music.

I know far more people who are making lots of money doing traditional, un-sexy businesses, and I can't think of anyone I know personally making money with apps, web2.0 etc.

but regular business takes work and risk of total loss of capital. I can double my money buying Snapchat and then do nothing but watch TV and eat Cheetos for the next 6 months as VCs bid it into the stratosphere

As many, many, many people have discovered - investing in startups has as great a risk of losing all your capital (actually, a much greater risk) than investing in a bricks and mortar - the major difference is that there is also a much greater chance of huge returns.

The reality is only 1 in 100 people are likely capable of building a great startup (in the PG sense of "Startup") that succeeds - but there is a huge part of the population that can build out a brick and mortar traditional company.

To put things into perspective, On the App Store, about 3,000 of the 1mm or so apps are capable of supporting a developer in the United states with the Median US Income ($53,800/year).

In that case, would you like to buy some shares? I'm planning on disrupting disruption itself with a new social app for users to generate social apps for user generated content. No more investing in many companies waiting for one of them to succeed, give me all your money now instead and one of the users will eventually generate the platform of tomorrow without either of us having to do anything today. It cannot possibly fail.

As any trader will tell you, "the price justifies the risk". You won't be able to buy a share of SnapChat now at a low price relative to fair value ( if, as others have suggested, you're able to buy at all ). Look close and you'll see that for top deals, even VCs and bankers margins are getting squeezed.

you're not a top VC firm - nobody is selling you Snapchat shares, so your argument is moot. if you want to invest in every startup looking for a seed investment, you are going to have to invest in a lot of them before one becomes the next snapchat. most VC funds have poor returns or even losses.

I doubt it will be the VC's bidding once it goes public, typically it will be the public and investment funds. VC's on the liquidating side once one of their investments go public so they can get their exit.

can you elaborate on how you are going to make investment of $100k to private app companies like Uber, Snapchat, and Tinder given that you didn't get to invest in their angel rounds and it was hard to tell that those apps were gonna succeed?

This is a pretty foolish and naive way to view internet startups. I'm sure you would've said the same thing about Zynga, Groupon, Digg, etc.