Augustus Gloop
“Augustus Gloop” – a cartoon illustrating 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 startups 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 $600M 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 startups during this time suffering as startups run out of capital.
For example, Tiger Global (which did 335 investments in 2021), recently wrote to its investors 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 startups to their boards.
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