Recent Investments in Facebook Are Misleading
When you play poker and you think you have the winning hand, you go all in. You do not limp around or slow play. You go for the juggler. This is because you know you have a sure thing and you are guaranteed to win. When I take a look at the recent round of funding that Facebook has raised I am left with the feeling that Facebook is anything but a sure thing.
Here’s why.
While I am no venture capitalist, I know a thing or two about investing money in companies (I was a fairly successful day trader at one point) and I know that investing is very much like poker. Sure, there is luck involved, but if you make the right moves you can increase your chances of “getting lucky.” I know that when you have the “nuts” you go big, because you know you have a sure win. In this recent round of funding, none of the investors went big. Microsoft invested a third of what they were reportedly interested in investing and the remaining 500 million that was raised came from two different hedges funds.
If Facebook was a sure bet, one of these three players or possibly another suitor would have went all in. None of them did - they all limped in.
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1 comment so far ↓
Your post assumes that unlimited supply was available to meet demand. Instead, I think that FB did not want to let go of more than 5% of the company, so that the investors took what they could get (Msft and the NYC hedge fund investors).
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