Fact Checking in the Startup World

This isn't a story that should be on the front-page of Hacker News. It's just rumor-mongering. The fact that the author is unwilling to name names or provide any evidence whatsoever regarding this hypothesis is proof of that.

VCs are making financial risk decisions based on many factors, and they aren't obligated to research before they buy any more than I am obligated to research stocks. Not only that, but they are certainly aware that most of their investments won't pan out - they just want to make sure they've invested when the next facebook comes along.

Therefore, I think startups should put little weight on how much investment was given to them (or others) - it's not the same as "validation" that the product is going to be useful. That comes from actual customers buying the product.