Ask HN: I own a VC fund that bought Twilio in the early rounds. Now what? | Hacker News Reader

Ask HN: I own a VC fund that bought Twilio in the early rounds. Now what?

7 pointsHockeyPlayer6 comments

Will I get shares? When will they arrive?

Can I short the stock or buy puts in the meantime?

I could obviously ask the VC, but I though the HN discussion might be interesting.

Sorry to disappoint, it's likely you won't get any shares.

The VC invests on your behalf and is likely to sell them when the lock-out period expires and simply give you your returns when the fund closes down/rolls over.

I don't want to sound snarky but, If you didn't know it was going to be this way, I wouldn't advise involving yourself with puts and shorts.

If you are in the VC scene, presumably you have a decent amount of investment capital. I think what you need to focus on is not so much the equity selection (i.e. short/buy Twilio), but on asset class allocation. You should pick up David Swensen's Unconventional Success to understand the details of why asset allocation is by far the most effective method to maximize returns in the long run.

So, instead of shorting Twilio, you should be thinking about the expected return from the VC fund, and how to re-allocate your investments. I'd assume that the VC funds are giving you outsized returns in the recent years, so you should try to balance your portolio by making investments in the real estate, natural resources, mutual funds space, etc.

You can buy puts. Puts are a form of insurance. That is why in general they command a premium when compared to calls at the same level when theoretically calls can go much higher than puts since the lowest a stock can go to is 0. However if the VC fund is an index of many different assets, then you need to figure out what percentage of their assets are in twilio and buy puts for that amount.

I bought Authy in a late round, then they were acquired by Twilio, then Twilio went public, then the structure I invested in sold the stock and I already received proceeds from sale of those shares.

So for you I would be asking: where is my money?

I'm surprised your structure could already sell Twilio shares. I believe most investors were locked up for 6 months.

If you are locked up for 6 months and this is a life changing amount of money I highly recommend shorting the stock to lock in gains.

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