Friday, February 21, 2014

Snapchat, Hedge Funds, and the Future of Investing in Startups

Where there's money to be made, you'll find investors…ok, hedge funds.

Jeff Hoffman keys on startup success

Jeff Hoffman keys on startup success (Photo credit: TechCocktail)

Leena Rao's TechCrunch article yesterday on the return of hedge funds to startup investing identifies a trend that we all felt was happening but didn't necessarily have the high-profile example to jog us. When Snapchat, the hot social app reportedly rebuffed a $3 billion dollar buyout offer from Facebook and instead, turned to go it alone by raising a $50 million round, it did so not by turning to venture capitalists.

Snapchat raised its money from a hedge fund (from Coatue Management, to be exact).

And there are other examples of hedge funds leaving the world of public market investing to place their bets on startups:

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