

Fantasy VC Picks - sohailprasad
http://sohailprasad.com/fantasy-vc

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ChuckMcM
Challenging to get the inside scoop on valuations and such but conceptually
it's an interesting play.

My suggestion is that you set up a prediction market, with play money of
course, where you buy shares on a prediction, so "Foo - Acquihire" yes/no,
"Foo - IPO" yes/no, "Foo - Acquistion" yes/no, and "Foo - Deadpool" yes/no.
Maybe even lesser bets like "Seed", "Series A/B/C/D/E". You get the value of
the shares if your prediction occurs, you get 0 if your prediction does not
come true.

With enough participation I expect that could get a bit dangerous (actually
moving the market) but its easier than my other idea which is take the stats
for every known founder, engineer, marketer, Etc and create actual fantasy
startups and have those fly or die based on events that the real people they
are based on are seeing.

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markhall
Love it. Each year, I do March Madness brackets and Fantasy Football. The only
thing that surpasses my interest and knowledge in sports, is my interest and
knowledge in the tech space, with special focus on investment injections and
long-tail performances. Would love to see this become widespread. Keep it up!

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rdl
I'm concerned I'd be a bad financial investor because I'd want to invest in
interesting technologies that I really understood or found interesting, vs.
things which seemed like easy returns.

If I had 100k/yr to invest in startups (which would mean investing $1mm/yr to
have a decently safe allocation, unless I had $100mm in existing safe assets),
it that's either 1-4 small angel investments per year, or somehow buying an
index fund of startups. The only index fund I'd want is one which inherently
included all startups, not just the ones which chose to be part of the index,
so it would have to be YC VC or something like that. As far as I know, neither
of the YC companies doing investment markets could offer that at the current
time.

The only way for 1-4 small $25-100k angel investments to be meaningful would
be to add a lot of additional value, or to already know the founders really
well. So, I guess I could do infrastructure, or gov/intel, or security. Of the
public YC companies this batch, only 3-6 really fall into that category.

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vm
I find getting into hot deals to be one of the tougher parts of VC/angel
investing. There always seems to be a lot of money chasing the best deals.

That being said, I don't have to deal with salary caps and a bazillion other
complications when I play Fantasy Football. And this looks like fun! Thanks
for posting Sohail.

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mammalfriend
This! Obviously good investments are almost always oversubscribed, and
additionally not all startups are raising angel money all the time. You need
to find the overlap of:

* Company is raising now * You can get in on the deal * Terms are acceptable * You want to invest in the company

These are some reasons why professional investors are so busy taking meetings,
and why so many angels piggyback on deals with more active/well known
investors.

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lilfeetpete
This is awesome. I'd really like to see a platform made for this.

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asanwal
TradeVibes tried this many years ago (their assets were ultimately acquired by
VentureBeat) so as a side project for fun, maybe. As a viable business, not so
much.

The problems with this type of "exchange" are as follows:

\- There is little data and liquidity to "price" these companies. SecondMarket
and the other markets like that had this issue as well. Everyone is interested
in Facebook and Groupon when private. After that, nobody knows or cares. And
the interest is based on popularity - not on fundamentals of companies.

\- The audience for this type of thing is relatively small - startup
enthusiasts, startups themselves and maybe VCs. It's not like Hollywood where
virtually anyone has an opinion.

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lilfeetpete
I agree, I don't think a large enough number of people would find it all that
interesting but there should be enough to make a fun sustainable platform
provided it resources put into it are kept to a minimum.

I agree that it would be practically impossible to work out how much the
companies are worth by traditional investor metrics, discounted cashflow for
example. But what about other metrics - user signups, number of times tweeted,
number of followers on twitter, number of uniques on site, number of mentions
in articles/ posts online...

I believe <http://appdaq.net/> used some of these ideas.

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dcaranda
No Betable? Just curious given Sohail's real money gambling role at Zynga.

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zck
What better way to learn what kind of things convince VCs to invest than by
_being a VC_? Even if you never invest a dime in any other company, you'll be
a better entrepreneur if you do this.

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rhokstar
If you're good at deconstructing a business model, finding out who's hired at
X company, reverse engineering code, and analyzing the competitive startup
landscape...

You'll come out ahead!

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hack_edu
Are we really at the point where startups are a spectator sport?

edit: Apparently we are. Wow.

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sohailprasad
It's not about being a spectator sport. It's about identifying (potentially
undervalued) opportunities early. I didn't make this list to speculate, it's
where I'd put my money if I had money to invest.

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hack_edu
"People who can't own their own sports teams play fantasy sports. People who
can't invest in the stock market do virtual trading. Why should I be left out?
I decided that I'm going to publish my list of investing picks (that I've kept
private up til now), so that in the future I can (and you can) look back and
see how I do."

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sohailprasad
Plenty of people say "oh I called it" after the fact. "I knew it was going to
be big."

I wanted to publish my list publicly (esp. given YC W13 Demo Day) so I can
publicly see my performance over time. No cheating and calling it after the
fact. Trust me, if I had access to money to invest, I'd keep this list to
myself and put my money where my mouth is.

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marchra
The error in this exercise is the assumption that they would even take your
money. Dwolla is going to accept your $75K last February? And you are?

Really like ChuckMcM's acquihire/deadpool idea.

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tatsuke95
SV mentality.

Dwolla is too good for my 75k? Good for them. Companies like BofA, Walmart,
GE, and literally _thousands_ of other companies would love to take that money
and put it to use. Only in the upside down world of SV would you have to be
somebody to have your investment accepted.

As far as the prediction market, it would be useless with play money. Skin in
the game is what drives efficiency.

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karamazov
I assume you're talking about buying stock. When you do that, you're not
actually giving money to the company unless it's an IPO; you're buying shares
from other investors.

When companies raise money, they only raise a given amount. This is true from
seed rounds through IPO and subsequent stock issuance. If people want to buy
more shares than the company's issuing, some of them won't get shares (and
raising the price of equity isn't always the correct answer, especially for an
early stage startup).

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tatsuke95
Bonds...

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jamesk14022
Digg, haha.

