One of the most important investors of Sequoia, the manager of Roelof Botha, sees signs of another brewery of greed in business capital capital, where less sophisticated investors will probably be injured.
Posted one Warning of x On Thursday, writing: “We remain destined to repeat the mistakes of the past! The SPVs make an indirect, where the lead investor talks about less than 10% of the capital, but eagerly the last set of tourist chumps who believe that the story will end.”
This last round ended badly. In 2022, the overheating of the VC market of 2021 crashed. The phenomenon continues, with 2025 is expected to be another violent year of failed start -ups.
Botha specifically warns of special purpose vehicles (SPV) – a structure that allows the starting investor to sell access to one piece of their shares to others. But new investors do not really buy shares at startup. They buy SPV shares, often at very inflated prices. This means that the starting valuation should only go up for some of the SPV owners to break yet.
SPVs become particularly common in AI investment, where some newly established businesses increase astronomical amounts. A search of files sec finds in at least nine spvs I have only shown anthropogenic by 2024. Reportedly, the company is in talks to raise another $ 3.5 billion.
AI’s attempt to raise $ 1.5 billion is also full of SPV, per the information. Note that no company is in the Sequoia portfolio.
The trend is not limited to just a few companies. Almost every major AI company AI has investors offering SPV. And if a VC Big-Name-say, Sequoia andressen Horowitz leader leads the deal, this name can only entice buyers.
A person involved in secondary education markets describes the SPV agreements like this: “They pass the hat on all agreements that cannot find many VC investors and the name business sets a tiny amount and these stupid family offices say Andreessen is driving that it must be good”
Botha’s message to these potential investors? “Don’t buy it.”
Sequoia did not respond immediately to a request for further comments.
