In each case, I see capital being allocated to growing companies in a sloppy and haphazard manner. Did any operational rigor go into giving Company A $250M vs $50M for Company B? What if the right number for both A and B was $100M? While this frustrates me, it must be completely infuriating and unnerving to the entrepreneurs that feel the brunt of this sloppiness. The impact from either over or under capitalization are equally bad: board dysfunction, pressure to focus on short term objectives to justify the last round, bad or non-existent governance etc.
Changing the Growth Equation: Welcoming Tony Bates to Social Capital
Chamath Palihapitiya
1625

Couldn’t agree more. In my experience there’s another variable that amplifies this problem — lack of specific domain expertise +/or superficial understanding of the space.

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