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Comment by kolbe | Hacker News Reader

I'm in Chicago, far away from the action in SV. Lately, my friends and I have been getting unsolicited calls to participate in the next rounds of funding for various "unicorns." We are mostly just laughing, because it's farily obvious that we are only getting these calls now, after all these years of unbelievable[1] tech returns, because SV thinks that backwards and unprogressive midwesterners like us are going to be the goats buying the top of their grand pump-n-dump scheme.

[1] as in, not believable

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It would be uncouth of me to say "I doubt that this comment is a literally accurate transcription of something which happened in consensual reality" but if anyone is hanging around the phone wondering "That's funny, Uber never called me": unless you happen to run a VC firm, it's highly, highly unlikely that a late-stage startup raising e.g. a D round at a multi-billion dollar valuation is interested in making your acquaintance as an investor. At seed stage or maybe an A, sure, a $25~$50k check from a technologist is still a meaningful amount of money (and valuations would probably be single-digit millions), but even if there were no legal issues at play, no firm raising on a billion dollar valuation will speak to you because the time it takes to close you would be better spent on convincing someone who can write a check that matters.

You're writing words as if you disagree with me, but you are making my point. The only time we would get a call is when they've run out of every other option, and are willing to endure the added cost of desperately trying to find anyone to write them a check. This isn't an unusual circumstance in marketplaces. Sometimes investors are hard to find. But a good way to differentiate a distressed investment and a pump-n-dump is that when salesmen are desperate to make a sale on distressed investments, prices are usually near record lows. For PnDs, they're at record highs.

And as for the calls. We don't get them directly from the company. It's banks who are organizing pooled investments.

I'm not too familiar with this, but I have read a few stories on Bloomberg about some of the large investment banks selling chunks of shares of Uber to their clients. Just the other day they said they reduced the minimum order size as well (I think they said $25k).

I have done zero digging, but it doesn't shock me that people at JP Morgan and other investment banks are making calls to their private wealth management clients to offer them shares in large private 'unicorns'

Didn't this happen during the sub-prime crisis where the firms sold their toxic assets to their clients.

This is probably different. The problem with the subprime crisis was banks had to keep the mortgage assets on their books. They'd buy it -> package it -> sell it. Some banks realized, damn this shit is going to be worthless. And they sold their toxic assets.

Here, the banks don't buy a stake in Uber until they arrange the pool of investors. Or maybe they are selling shares from other clients who want to get out of the investment.

It's doubtful the banks themselves have Uber equity on their books.

"Goldman Sachs, itself an early investor in Uber through its venture arm"...

http://qz.com/305996/all-the-ways-investment-banks-are-cozyi...

And I bet they'd truly like to divest some of it at the current prices :)

They likely have liquidation preferences so they are probably extremely comfortable holding the "equity" while it matures at a premium to what they put in while holding an option on more upside.

I'm not getting calls directly but I am getting calls from second market brokers pitching companies that never used to be available (or sold instantly) like Pinterest and Uber. There is a large lot of Uber shares that one firm in particular has been trying to sell at the 50b valuation price for a few weeks now, seemingly without success. Just another anecdotal data point.

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