In his eternal quest to become a billionaire, Jay Hova is launching a VC fund. Say what you want, but the dude is in no way comfortable being a billionaire when you combine his and his spouse's fortunes. He definitely wants his own billion. In the past few years Jay has launched a sports agency, purchased Tidal (which Sprint recently invested in at a handsome valuation), and now, he is going to be raining $$$ on these Silicon Valley entrepreneurs. What are your thoughts on the burgeoning celeb VC scene? Melo, Kobe, and now Jay Z have entered the space in recent years. I, for one, hope they're successful.
link to the story: https://www.axios.com/jay-z-is-launching-a-vc-fun…
I don't know if you can call the celeb VC scene burgeoning. Celebs and high profile people have been in VC for awhile now and they will continue to be involved in someway going forward. Whether or not they are successful will depend on how much their celebrity status / clout will get them access early enough at the best deals.
Probably going to have GREAT LP's (this is sarcasm)
I get it. +1 SB
how does this not have the most SBs of the thread?
This is the absolute last place i would park my money if i was in a position to be an LP.
What is their industry expertise? Music? I can't imagine there are a significant portion of small, high growth record labels out there.
You do realize Jay-Z didn't achieve his current ~$600 M net worth through just music.... the guy is involved in a ton of different shit. And clearly doing something right so far...
Contrary to popular belief, having a lot of money =/= being a good investor
I wouldn't be surprised if under the LP-GP agreement, there are restrictions on the type of startups that he can invest. I could see investors being more concerned about JZ investing in B2B SaaS vs a consumer-product based startup (going back to the idea that JZ's brand and popularity can generate the initial momentum to take said startup to the next round of funding).
It's like Dre with Beats. Shit headphones that make a ton of money cause athletes use them. Stay in your wheel house JZ and you'll make cash. You start investing in SAP and you'll lose cash.
What do you mean? F500 companies won't adopt an enterprise level software even if it's branded and backed by a pop-culture icon? haha
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Hmmm. A post talking about JayZ as a venture capitalist and someone disagreeing that he will be good at it = hating?
1) Yes, JayZ is popular and connected. If you read my posts, I said that he will see profitable VC opportunities as long as he remains famous and popular. As you mention, Ashton Kutcher killed it with various VC opportunities (twitter) not because he was smart, but because he is rich/popular/famous.
2) I am not bitter. I don't particularly care for JayZ, but that is because I am not interested in rap or hip hop style.
3) Agree that it takes relationships. But given the choice between real VC investors and JZ, who has experience in branding and consumer products, I'd prefer the former.
4) Your post is shit and contributes nothing.
Can I get a reason why WSO moved a PE/VC topic out of the PE & VC forum and into the macroeconomics forum?
http://www.digitalmusicnews.com/2017/01/20/jay-z-tidal-fraudulent-subsc…
"In other words, Jay Z and Tidal’s claims are probably made up. “There are other examples of companies over the year that have misreported numbers or been overly creative, but this is the biggest and most high-profile case so far”, Mulligan said."
On one hand: a news story saying Tidal sucks, mentioning Jay Z's drug dealing past from 20+ years ago (how that was necessary for the story idk)
Other hand: Sprint invests $200 million in Tidal
I think I'll go with the dudes who put real cash on the line.
The story is about inflated user accounts. It's all over the internet. And sprint overpaying for something is hardly surprising.
You guys have to realize that the so called 'best' VC firms only make money because 1 of their 30 investments was super successful. People try to pretend like they know what their talking about but it's essentially all a guessing game at the seed/Series A stage. VCs are excellent at taking credit in their super successful investments - it's just a marketing game to fundraise.
To that point, Jay-Z is very connected. He WILL be involved in the most competitive deals. Will they pan out? Your guess is as good as mine.
This. The 'technical skill' of VC investors is much exaggerated -- but that's also not what necessarily matters for their returns. And the power law ensures incredible skew / favourable selection bias in VC to an even greater extent than when you look at top-quartile buyout funds, for example.
Not quite sure why all this hate on Jay-Z as an investor.
Fine, he isn't the guy you pick to build a model in excel, who gives a sh1t?
Fairly sure the measurement for a good investor is just risk-adjusted compounded annual returns, and going from 0 to 500m in 30 years is up there in terms of 1st ballot hall of fame investor.
Why is one form of investing "better" than another? Everyone has a different edge. Warren Buffet is good at finding undervalued companies that will provide returns over a long period of time, some people are mathematical geniuses, some are great instinctive macro traders, some are good at weeding out which startups will go big. Jay-Z's edge is that his prominent rap career led him to have massive marketable value that can drive sales. Definition of a successful investor is finding your edge and being able to maximize it, which JZ is clearly very good at (plus clearly knows how to run things operationally, as others have pointed out, celebrity + brand doesnt necessarily equal good returns).
I doubt all of a sudden he abandons his edge as well, he damn well knows the value he brings is his name, so there is no reason not to create a vehicle where he can monetize this edge across tech. I doubt they will be looking for a tech company that helps businesses with data processing or some sh1t like that, the equation for him is fairly simple:
Can buy business at $20m, I can bring value of $20m just by adding my name (branding, marketing etc) = biz worth $40m = 100% return
People can hate on the fact that his edge comes from his brand all they want, but in my book he gets my respect as an investor, and maybe even moreso than just someone that 'identifies' cheap businesses, JZ can effectively buy fairly priced businesses and make them more valuable, i.e. creating his own return.
I think a lot of people also forget that these celebs are delegating a lot of the work to people who actually possess the expertise. Personally I think both Jay and Kobe are really smart dudes. It's not like Jay-Z is going to be staying up at night building an Excel model. If you look at Kobe's fund, he's partnered with a dude who's been in the PE/VC industry. Steve Young did the same thing. I'm sure Jay-Z is going to find the right people to help pick his investments and run the day-to-day...say some seasoned VC professional or whatever. These celebrities can help provide a lot of exposure to the companies they invest in. We all know how Jay helped push the Ace of Spades crappy champagne brand just through his songs and music videos (Go watch "Show Me What You Got" video). It's not inconceivable to think that Jay could invest in some company and then use his connections and cache to provide instant marketing to the company.
Softbank Vision Fund + Softbank owning Sprint + Sprint buying 1/3rd of Tidal at $600mm valuation = Jay-Z's fund having connections.
He will be a billionaire in his own right. All non-black & brown WSO users, be salty.
Still getting hit with monkey shit for this nearly a year later.
Guess there are still some salty non-black & brown WSO users.
Most people don't know this, but Jay Z has a photographic memory.
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