Not only that, but how would they? Do they keep experts on staff (and risk that expertise going stale, if it's reliable in the first place)? Do they bring in outside consultants/contractors (and risk espionage)? Do they interrogate employees (conflict of interest and perverse incentives galore)?
I'd argue that this is a fundamental problem with traditional VC, in that, in general, they have no expertise in the ventures, and their financial incentives and neither well aligned with those ventures nor with their investors (limited partners).
> invest in really solid tech vetting, but it seems like they treat it more of a cost center
To be fair, though, it is, both for them and the target company, assuming that there's no fraud (or delusion?) involved.
> Perhaps seeing $700 million go "poof" in this instance will provide some motivation in the future?
You do bring up an interesting point about the sheer magnitude of this loss. By comparison, pets.com was only $300 million.
Although it provides some motivation, in that it may exceed what was priced in, is it enough to change the way the industry behaves?
Definitely not holding my breath for change, that's for sure!
Interesting points about the difficulties of in-house staff. Although my first instinct would be to expand it, you're right about ti getting stale, and also that structure was one I've seen make mistakes (maybe because they were stale). Tough nut to crack indeed..
Not only that, but how would they? Do they keep experts on staff (and risk that expertise going stale, if it's reliable in the first place)? Do they bring in outside consultants/contractors (and risk espionage)? Do they interrogate employees (conflict of interest and perverse incentives galore)?
I'd argue that this is a fundamental problem with traditional VC, in that, in general, they have no expertise in the ventures, and their financial incentives and neither well aligned with those ventures nor with their investors (limited partners).
> invest in really solid tech vetting, but it seems like they treat it more of a cost center
To be fair, though, it is, both for them and the target company, assuming that there's no fraud (or delusion?) involved.
> Perhaps seeing $700 million go "poof" in this instance will provide some motivation in the future?
You do bring up an interesting point about the sheer magnitude of this loss. By comparison, pets.com was only $300 million.
Although it provides some motivation, in that it may exceed what was priced in, is it enough to change the way the industry behaves?