There Goes Pattern Matching?

venture capital pattern matchingWhatsApp is the talk of the town.  The biggest VC-backed M&A exit in history tends to generate a lot of conversation as it should.

But what’s interesting about WhatsApp beyond the big price and deal aspects is that it doesn’t fit many of the conventions you’d expect:

  • The founders were old – Because 40 is now old
  • They worked at Yahoo! prior – Google and Facebook don’t have a monopoly on talent
  • They didn’t whore it up for the media – They actually thought PR attracts the wrong type of users.  In fact, they kept their financings secret versus celebrating them as has become de rigueur.
  • They didn’t raise from a syndicate of investors because of concerns about signaling risk or to create competition among investors in follow-on rounds
  • They obsessed on the product.  There was no growth hacking (beyond building of a product that worked) or PR (as previously mentioned)
  • They raised relatively modest amounts of funding – $60M isn’t a little money but on average, private tech companies valued at over $1 billion have raised an average of $237 million

But WhatsApp is an outlier you say.  Sure is.  But the outliers are what make VC work (for the few that can find and get into them at all).

Is pattern matching as a way to identify investment targets really still relevant?

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