[jacquesm]

Most IPOs are indeed the time to cash out for VCs and early investors but that doesn't mean they're scams. What Andreessen was doing was - in my opinion - a scam, plain and simple.

If a company folds days after the IPO then you probably have a point, but that rarely happens. Many of the companies that IPOd in the last two decades are still trading, and the ones that are not have been scrutinized quite a bit to see what went wrong and how a re-run can be avoided.

I'd be very wary of anything that tries to get a listing without going through the regular IPO process, for instance SPACs and direct listings. The chances of getting scammed there are much, much higher than in the normal IPO process which has many rules and transparency requirements.

[kbenson]

Many crypto coins haven't folded, they're just worth a lot less. Every investor wants to hype the company before an IPO, and many of they are likely looking to recoup some of that investment as soon as they can without too much adverse affect.

I don't think they're the same, but they share quite a few things in common. There's a lot about affecting the public perception, getting the public to act on that perception, and then executing at the most opportune time to take advantage of that public perception. Crypto takes this to 11 by minimizing the actual product and maximizing the impact of affecting public perception, but I can see how VC people could see the crypto cycle as an extension of what they already do.

[jacquesm]

Only a very tiny fraction of all VC investments make it to IPO, whereas all ICOs are offered to the general public from day #1, that's their whole reason for existence. Almost all crypto is a scam, almost none of the VC activity is a scam. Where VC and crypto coincide (such as with the author of TFA) it is pretty clearly a scam too.

[kbenson]

I'll give you that. I'm just focusing less on the scam/not scam portion and more on the actions taken and outcomes expected. Money in, cycles of hype and growth, money out.

The main indicator of whether it was intended to be a scam is possibly best indicated by how much they liquidate in that last step. If they still have a large position after the main hype and growth cycles are done (and it's not mandated by some outside force), then whether it goes south or not they probably weren't intending to scam. If they jump ship when they can, well why were they hyping it so much prior to that if not to scam other people into funding their exit?

[jacquesm]

You'd have to know a bit more about how venture capital funds are structured to see how this makes sense. Most of them have a limited run-time, usually between seven and ten years. This means that the pressure to 'exit' is on the VCs big time because after the fund expires they no longer get to charge those sweet management fees. But they still have to do the work. So typically after year five you'll see funds to more investments with a short horizon to exit and early on they'll take longer shots to profitability.

For seed capital it's even worse there it easily averages to a decade for an exit. My oldest investments go back to 2007, and that's for the ones that 'made it', the bulk of them dies long before that.

[kbenson]

Well, I'll definitely defer to your actual knowledge on the subject as others should rather than following my ramblings given I'm honestly (and obviously) just speaking from what it looks like on the outside. Thanks for putting a bit more detail and knowledge into the motivations underlying this.

[jacquesm]

In well over 200 deals that I did DD for I have seen exactly zero IPOs (this is Europe though, in the US it may well have been a different mix).

On my own investments (quite a few by now; > 20) I've seen one big exit, one smaller one but still successful, and a number of acquihires. Besides the ones that crashed the remainder is still in play and probably will be so for years to come. And probably there will be one more big exit in there, I don't expect any of them to IPO.