The Greed Cycle Continues: Sequoia's Warning on Spvs
Sequoia's managing partner Roelof Botha has issued a warning about the dangers of special purpose vehicles (SPVs) in venture capital, where less sophisticated investors are likely to get hurt. The structure allows startups to sell access to shares to others at inflated prices, which can lead to astronomical valuations for some investors but not necessarily the startup itself. Botha's warning comes as SPVs become increasingly common in AI investing, with major companies like Anthropic and Figure AI relying on them.
- The emergence of SPVs highlights the need for more scrutiny of venture capital deals, particularly those involving high-growth startups, to prevent investors from getting caught up in a cycle of inflated valuations and failed investments.
- How can regulatory bodies and industry watchdogs effectively address the risks associated with SPVs and ensure that venture capital practices prioritize long-term sustainability over short-term gains?