These investors aren't investing their money, but someone else's money. If Uber folds now, these investors are to blame. But if Uber folds when the great crash (a-la 2001 and 2008), then, well, it's the entire economy - not the individual investor's fault.
So they do whatever is needed to keep Uber with high book value until the big crash. What's $20B of other people's money to maintain your sterling reputation as a smart investor?
Social Capital's Chamath Palihapitiya had an interesting theory of VC overvaluation in his recent letter:
> [VCs] get paid to allocate other people’s (LPs) money, and they are smart
enough to transfer the risk. For example, VCs habitually invest in one another’s companies
during later rounds, bidding up rounds to valuations that allow for generous markups on their
funds' performance. These markups, and the paper returns that they suggest, allow VCs to raise
subsequent, larger funds, and to enjoy the management fees that those funds generate.
These investors aren't investing their money, but someone else's money. If Uber folds now, these investors are to blame. But if Uber folds when the great crash (a-la 2001 and 2008), then, well, it's the entire economy - not the individual investor's fault.
So they do whatever is needed to keep Uber with high book value until the big crash. What's $20B of other people's money to maintain your sterling reputation as a smart investor?