Thoughts on the StockTwits Deal

Full disclosure:  I’m not a user of stocktwits and spend very little of my personal energy thinking about stocks.  I do spend a considerable time with twiiter and even more time with some of stocktwit’s investors.  I think about startups quite a bit.

Stocktwits is interesting to me because they put together a Series A financing (I have to believe this means low seven figures, but I don’t know and haven’t asked) lead by IA Capital which is Roger Ehrenberg’s name for his personal investments.  Because Roger “lead” the deal (he was a previous investor) he built a large and diverse syndicate of Wall Street oriented professionals and Internet folks.  Roger lists 11 different investors on his post and apparently this list was not exhaustive.  Only 5 years ago, Series A meant professional venture investing and was primarily limited to two firms.  If I’m Soren and Howard ( I do not know either) , I would much rather have a group of individual wall street types that are actively tweeting and contributing to the community than virtually any venture firm in the world.  Seriously would Sequoia be better for Soren than the list of investors in Roger’s syndicate?

Unfortunately, most companies in StockTwits space don’t have the choice because the angel market has rarely been able to reliably organize itself into a syndicate that can do seven figure transactions.  But if they are able to do so by using professionals like Roger won’t this create competitive pressure on the venture business?  I would rather have Limited Partners than General Partners when the limiteds have so much industry expertise and industry clout.  Given an equal investment of time Is Michael Moritz or Michael Parehk better for StockTwits?

Perhaps people wrote about this theme during the week, but I didn’t see it.  Well organized personal capital may make considerably more sense than institutionally managed venture capital.  Over time, this could be a big change for the venture industry.

Fred Wilson’s post casually explored this theme, but Paul Graham certainly gets it  in  his latest essay.


One Response

  1. aaron, very insightful post. thanks for taking the time to share your thoughts on how the stocktwits deal was done. you pretty much got inside my head with this post. fyi, the round size was $800k. it was oversubscribed.

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