FORTUNE — Shortly after Facebook (FB) agreed to acquire mobile messaging company WhatsApp for a record $19 billion, I spoke to Sequoia Capital partner Jim Goetz about why Sequoia was the only venture capital firm to have ever invested in WhatsApp.
To paraphrase Jim’s answer: To paraphrase Jim’s answer: Because it wanted as much equity in the company as it could get. Ultimately the entrepreneur has final say on new investors (or lack thereof), but Sequoia didn’t fight for a minority investor on the Series A or outside lead on the company’s Series B or Series C rounds. If WhatsApp needed more capital, Sequoia was more than happy to write the check solo.
This may sound obvious, but it really is the exception in venture capital circles.
In almost every other case, a company like WhatsApp would have had multiple investors by the time Facebook came calling. For example, Facebook itself had eight institutional investors by the time it turned four-years-old. Same with Twitter (TWTR). Even Sequoia-backed Google (GOOG) had another major VC backer in Kleiner Perkins.
Sometimes the multiple investors are a reflection of capital requirements. But, most often, it’s rooted in the concept of social proof — a validation protocol that has the effect of making risk look…well, less risky. After all, how bad could an investment be if someone else is willing to do it too?
For example, remember what Institutional Venture Partners wrote about one of its reasons to invest in SnapChat last year?
Sometimes social proof manifests itself in seed-stage rounds, particularly via online platforms like AngelList. Sometimes it’s in early-stage deals, either with co-lead investors or a single lead who brings in other institutions for smaller stakes. But, most often, it’s in follow-on rounds like Series B or Series C. Here is how venture capitalist Rob Go recently explained it:
But Sequoia didn’t fall into this trap on WhatsApp. It saw something great, kept everyone else away and is now reveling in the largest-ever sale of a VC-backed company. This has got to cause other VC firms to take notice. Right?
To be sure, I’m not the first person to suggest that social proof deserves to be on the run. Venture capitalist Hunter Walk wrote that very thing in this space nearly two years ago. But it’s one thing to make investment strategy arguments, and quite another to keep reading about the courage of someone else’s convictions.
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