Stay Away From Insider-Only Venture Capital Rounds

  1. Increased chance of being sued by the company if insiders don’t offer a mark up
  2. Improved signaling to “window dress” for other investors and fundraising purposes
  3. Down rounds have an extra cost in triggering anti-dilution provisions which often must be renegotiated
  4. Investor hubris
  1. VCs are more likely to participate in follow on rounds post-investment period than during the investment period
  2. Inside rounds underperform relatively across funds of the same venture capital firm
  3. Funds in the ‘post-investment period’ tend to make follow on investments longer than their ‘investment period’ coinvestors

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Jesse Bloom

Jesse Bloom

Wealth Management, Venture Capital, Scuba Diving www.jessebloom.co