Hedge Funds: The Dumb Money in VC?

Start-ups are finding it easier and easier to raise money, in part because of an eagerness on the part of hedge funds to cross-over into the private, early-stage space. The Journal claims that hedge funds are often willing to pay more for stakes in new companies than the venture capitalists themselves, prompting one to wonder if the traders have any idea what they’re doing. Usually, though, they’re just investing along side vc’s that are leading the deal. In the biggest raise of the first quarter, for example, Los Angeles-based Amp’d took in $150 million from a consortium that included four hedge funds in addition to a handful of vc’s. The last time this happened, things didn’t turn out so well.
Hedge Funds Get Active in Start-Ups [Wall Street Journal]

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