How Silcon Valley Keeps Its ‘Secretive Ecosystem Of Cash’ On The Down-Low

November 13, 2015, 7:11 PM UTC
TechCrunch Disrupt SF 2015 - Day 3
SAN FRANCISCO, CA - SEPTEMBER 23: Roelof Botha of Sequoia Capital judges the Startup Battlefield Finals onstage during TechCrunch Disrupt SF 2015 at Pier 70 on September 23, 2015 in San Francisco, California. (Photo by Steve Jennings/Getty Images for TechCrunch)
Photograph by Steve Jennings — Getty Images

Venture Capital firms, like Sequoia Capital, have been using a secretive network of so-called “scouts” to funnel money to promising start ups while avoiding the publicity that an investment from a big-name VC firm can bring, according to a report Friday in the Wall Street Journal.

It was as a scout for Sequoia Capital that investor Jason Calacanis got $25,000 to invest in Uber, a bet that is now worth roughly $110 million.”Scouts invest the money in startups and keep their eyes and ears open for ideas that Sequoia might like,” according to the report. It was through Calacanis that Sequoia learned about local-services company Thumbtack, which it later invested in. Now Thumbtack’s executives tip off Sequoia to promising entrepreneurs too.

According to the Journal:

The secretive ecosystem of cash and connections is an unusually powerful example of how venture-capital firms try to gain an edge in the never-ending hunt for the next blockbuster. That search has gotten trickier now that some startups with sky-high valuations are hitting turbulence.


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