Cartoon: Augustus Gloop
“Augustus Gloop” by Iantoons
This new cartoon illustrates the predicament of many fintech and blockchain companies that got themselves into the venture capital business.
During peak fintech and blockchain boom times, many tech darlings decided that investing in other start-ups was a good way to leverage their capital, access talent and help address product gaps.
For example, in 2021, Stripe made 21 investments and Coinbase did 121 deals (by way of comparison, Sequoia Capital in the US did 43 deals in the same year), yet these tech darlings were still taking in VC capital during this time (e.g. Stripe closed a $600 million Series H round in March 2021). It seems VC firms thought their portfolio companies were better venture capital investors than themselves!
However, like many exuberant parties, excess has its consequences, and today we see institutional investors that gorged on start-ups during this time suffering as start-ups run out of capital.
For example, Tiger Global (which made 335 investments in 2021) wrote to its investors last year saying, “We take very seriously that our recent performance does not live up to the standards we have set for ourselves over the last 21 years and that you rightfully expect.”
We have got to wonder how the CFOs at these fintech and blockchain darlings are explaining their large portfolio of underwhelming start-ups to their boards.
You can find more of Ian Foley’s cartoons here.
