Phi Scamma Jamma: Late Stage VC Investor Advanced Equities Shutting Down (Bloom; Fisker etc.)
That's a wrap.Of course at the intersection of finance and human cupidity there is no final post.
These guys would do middle-of-the-alphabet rounds (H-round, N-round etc.) that the Sand Hill Road crowd owned at 1/20th the valuation. They invested private placement style for accrediteds, giving the original VC's a nice bump in valuation while the AE principals got to act like they were in with the in crowd.
We were dubious as far back as 2008.
After the principals were hit with attention-getting fines, the last straw came when they were ordered to make a rescission offer to some of their Fisker investors.
Rescissions are brutal for that type of operator, they are not ordered when investors are making money hand-over-fist and tend to be accepted rather quickly by the investor and/or their counsel....
In 2014 I had to dust off the "epitaph" again:
"No Bubble At All: Jessica Alba's Diaper-Delivery Startup Is Valued At $1 Billion, Prepares For IPO" (we're more interested in the Snapchat final round)
We don't care so much about Jessica Alba but rather the Snapchat final round done by Kleiner Perkins which long-time readers will recognize as the same scam for which KP utilized gone-but-unlamented private placement packager Advanced Equities, see below....And again in January 2016:
"Uber Is Raising More Money From Rich People" (Al Gore and Snapchat do cameos)
This is a very bad sign.And so here we are once again with Ms. Kaminska out front. She discretely doesn't raise the rescission issue but puts all the other pieces together such that I can hear the voice of those old-timey nature show narrators describing the lion approaching the wildebeest:
Venture Capitalists will use the dumbest money they can find to get a late round to bump the valuation as high as they think they can get away with. More* after the jumps.
First up, Izabella Kaminska at FT Alphaville....
Sadly now, there can be but one outcome....I also hear Oprah's voice saying "You get a rescission and you get a rescission and you get a rescission and you..."
I may have to consult someone about the voices thing.
Here's Izabella:
Don’t be fooled, the authorities are coming after ICOs
If you’ve been watching the excellent three-part Netflix series ‘Narcos’ on Colombian drug lords in the 80s and 90s, you’ll have learnt by now that when faced with cross-border criminal enterprises of state-undermining proportions, authorities — especially American authorities — have a habit of waiting, watching, collecting evidence and then setting major precedents (usually with the help of ingeniously constructed honey pots).
We suspect the free-for-all in ICO issuance will be dealt with no differently, at least by jurisdictions that are serious about enforcing securities laws properly, as opposed to those (we shan’t mention any specific names) who see this as a novel opportunity to reassert their dominance and comparative advantage in the bearer asset, banking secrecy and offshore banking circumnavigation industry. All we will say is that terms such as “cryptovalley” should be perceived as a clue as to how jurisdictions stand on this front, as too should their state-level treatment of crypto “pioneers” such as Vitalik Buterin. A lot can also be deduced from the obsessive degree that some jurisdictions use the excuse of having to be “financial innovation” friendly to justify inaction.
Nevertheless, for those still wondering where the hell the authorities are on this, there is (finally) some reason to suspect the serious orgs in this space are on their way to take care of things.
Case in point this interview with Nick Morgan, a former attorney at the SEC now a partner with Paul Hastings LLC, with Epicenter — a crypto-themed cheerleadery podcast show — in which they discuss the SEC’s recent report on the DAO and what it means for the ICO boom.
The show amusingly starts off with a question to Morgan asking him to explain what the SEC is, because apparently a lot of their listeners won’t be aware of the organisation, let alone what its mandates are
The key takeaways relate to whether these things are securities or not and whether the SEC has jurisdiction over the issuances. As Morgan notes:...MORE
