There is a silly article in Wednesday’s Wall Street Journal about hedge fund incursions into venture capital. Sure, it happens, but it’s rare, and largely self-limiting to later-stage companies.
After all, hedge guys are way too impatient and capital-rich to mess with early-stage management-less outfits. In those places their “here’s the check, call me at the IPO” approach would just be a way to squander money. Sure, it’s “relaxed”, as writer Buckman says, but it’s also dopey.
So why does the author spend so much time on this nonexistent issue? Largely because of one anomalous deal — Pay By Touch — a year ago, where the firm raised $130mm from hedge-ies. It proved her thesis, so off she went, never questioning how limited the phenomenon is, despite only citing a few examples, all of which involved companies raising prodigious amounts of money.