There are so many red flags in that article, and that article is coming from Sequoia Capital itself. I can't understand how anyone would have invested anything at all in FTX, let alone an astonishing $1.3 billion in Series B and Series C. Does no-one at these VCs do any form of due diligence (e.g. reading the articles on their own web sites), or are they unfathomably incompetent, or living in some alternate reality from the rest of us where everything is reversed (incompetence is competence, war is peace, ignorance is strength, etc.), or is there something else I'm missing?
They likely thought they'd be able to front run any issues. VCs don't invest to build viable businesses, they invest to make money. You can make a lot of money as an insider to a Ponzi scheme.
If you're planning on front-running any issues, I doubt you'd put articles like that (which publicly exhibit an almost pathological lack of self-awareness) on your website.
I was kinda thinking the sell to investors was that only the depositors were going to lose all their money and that suited the equity investors just fine.
A decade of money printing left investors with more money than they knew what to do with, so they threw it at anything related to current thing chasing the next FANG (which by the way, hasn't really happened since the last crash...probably because the startup market is saturated). It was a good thing after the 2008 crash and we needed to revive the economy, but it went on for far far too long and now we have a bunch of overvalued/unprofitable/scam companies.
The corollary to this is that the average citizen is likely to believe that the average billionaire cheated their way into money. The recently passed prop 1 in MA is likely just the start of efforts to tax/regulate the activities of wealthy individuals.
You're missing the point of VC funds. Due diligence doesn't matter, incompetence doesn't matter, reality doesn't matter. What matters is if they can turn their 1 dollar into 2.
Doesn't matter if that requires breaking laws(airbnb) or stealing from naive people(shitcoins) they will do it, full stop. Once you understand that VC funds are literally robber barons who grouped together and gave themselves a new name it all makes a lot more sense.
Investors were offered chunks of FTT token that would vest long before any company liquidity event, in addition to company equity. So they were also buying into a speculative directional bet with faster returns, that they’d almost certainly get to dump on the market when insider info hits their networks. Not sure what the original source is but it was reported by Barron’s today.
