[Brushfire]

There is this weird thing in venture investing:

the line between "crazy, brilliant founders who will build world changing companies" and "crazy, lunatic founders who will lie and cheat and be awful" is very hard to distinguish, especially at the series seed/series A level.

It can lead to false positives and false negatives all the time.

[cj]

FTX didn't have a CFO. They didn't have a legitimate board of directors.

No VC in their right mind should ever pour billions into a finance company that doesn't have a CFO or risk management team, doesn't have properly audited financial statements, doesn't have board oversight, etc. Especially so in a risky industry like crypto where scams and fraud are well known to be rampant.

This is the main criticism I have of the people who invested in FTX. Even if you thought SBF was a world-changing entrepreneur 2 years ago, the structure of his company should have disqualified it from investment.

[Capricorn2481]

This, to me, is just a myth that is pushed by investors that don't know what they are doing, and media outlets who want to talk about spicy people. There's no strategic reason to put your eggs in the basket of crazy people. We only hear about the crazy people because they are newsworthy.

[rvba]

Buy a bag from a hypeman. Sell the bag just in time before the house of cards falls

[mrguyorama]

VCs don't care about the distinction, because VCs don't need a real, successful company, they need a story to sell at IPO