GSV Capital is an innovative VC firm that also happens to be getting crushed at the moment.GSV floats its limited amounts of its stock on the public market and then uses that capital to invest in late stage startups.
It’s a cool concept. Randall Smith profiles the firm in a New York Times story today.
The problem for GSV is that it has invested in the wrong late stage startups at the wrong time: Facebook, Zynga, and Groupon—before their IPOs.
That is a trio of companies that have been nuked on the public markets after their IPOs.
Back then, news of the deal sent GSV’s stock to soaring new heights, trading up 21% in a single day. GSV shares eventually reached $15.35. Now they are in the single digits—about $8.50.
It also owns some Gilt Groupe, Palantir, Chegg, Dropbox, Spotify, and Twitter stock.
It’s strategy seems to be: buy the blue-chip, hyped startups that are getting billion-dollar valuations.
The man behind is GSV is named Michael Moe, a former stockbroker who made his name touting the growth of Starbucks starting in 1992.
“We unfortunately have a social media segment that got tainted,” says Moe. “I completely get why our stock is where it is. It’s going to be a show-me situation for a while.”