The Rise Of The Hedge Fund Startup Investor (Again)


The first question I thought of when I read that San Francisco hedge fund Coatue Management was the backer behind Snapchat’s $50 million round of funding was which VC firm lost the deal. My second question was why take money from a hedge fund?

In the past two years or so, you have seen more hedge funds dabbling in tech investing. As one venture investor put it in 2011, “They are the antichrist of patient, supportive early-stage investing. But increasingly, hedge funds are scoring some of the deals you would expect traditional VCs to get. Case in point — Snapchat. Over the past few weeks, I spoke to a dozen or so public and private market investors around this trend, why it is taking place, and what it means for founders.

Coatue isn’t the first “cross-over” fund (an investment fund that crosses over to the private from the public markets)…

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