

Paul Graham: New trends in startup fundraising [video] - flexterra
http://www.justin.tv/c3oorg/b/272030715

======
2arrs2ells
I was there, and liked the talk.

One of the questioners asked pg if the trend of Google/Facebook (and to a
lesser degree, Apple/Microsoft) buying out companies for $20-30 mil to get
engineering talent is sustainable. pg's answer was more or less "Who knows?"
but I wonder if others have additional thoughts.

To me, it seems like a terribly inefficient system. The actual promising
startup idea/engineering gets thrown out. The cost per new hire is absurdly
high. And it doesn't seem all that likely that a successful entrepreneur will
be as successful inside a larger company (especially with a few million in
his/her back pocket).

At the same time, Zuckerberg said that Facebook has been happy buying talent
and is likely to accelerate the pace of acquisitions in the future... so who
knows.

~~~
tptacek
$30MM is a disaster for a VC for structural reasons, but it doesn't inherently
mean "talent acquisition". Is it really the case that (say) Google is buying
companies for $30MM strictly for the talent?

I had a significantly smaller number in my head associated with "talent
acquisition". I assume at $30MM there's a technology or line of business being
purchased as well.

~~~
2arrs2ells
Can anyone speak to the size of the acquisitions Facebook has made? Zuckerberg
said they were for talent - and I know some (friendfeed) must have pretty
significant in size.

Additionally, Dalton Caldwell (imeem) said that he thought Apple's lala
acquisition was just for talent as well.

~~~
tptacek
Lala was effectively bought for under 5MM (they were still flush from an
investment).

And, like FriendFeed, that was a _marquee_ talent acquisition.

------
bambax
[Caveat: I really don't know anything about raising money, so this question
may be stupid. If so, please be kind!]

PG says that

1\. "super angels" (acting like angels, but with outside money) are out to eat
VCs' lunch by filling the gap between ordinary angels and VCs, putting more
money than angels into startups but without requiring a board seat like VCs
usually demand

2\. VCs react to this threat by blowing up "valuation": they invest just like
super angels, but at higher valuations, because they don't really care about
valuation; they aim for the Big Exit (IPO)

3\. super angels have a problem with high valuations because (presumably) they
want to exit early; in an early exit the multiple is very dependent on the
initial valuation. Super angels are so reluctant to accept high valuations
that they brag not to fund the most high valued startups (which sounds crazy:
the most high valued startups are probably the best ones)

So, here's my question: does valuation have to be uniform? If I sell 2% of my
company to Mr. A for x amount of dollars, do I have to sell 4% to Mr. B for
$2x? Or can I sell 4% to Mr. B for the same $x, because he values the company
less?

It would seem, value is in the eyes of each buyer, who can pay what they want;
I don't understand how VCs can single-handedly manipulate the total valuation
of a startup? Why not segment the price for each kind of investor?

~~~
pg
It's difficult technically to do this in an equity round, but you can do it if
you're raising money with convertible notes. We encourage startups to do it,
actually, as a way to reward investors who are useful sources of advice and/or
commit before the others.

------
savrajsingh
How do I view this and other Justin.TV videos on iPhone? I have the app but
can't figure out how to get it to open this video.

------
_stephan
Is the written form of the talk already published somewhere?

~~~
2arrs2ells
Up on pg's site soon, I imagine.

