Seasoned start-up entrepreneur (Revision3, Digg, Pownce, and Milk) and investor Kevin Rose was recently interviewed at TechCrunch Disrupt and gave some interesting insight into the world of Google and how he passed on a golden opportunity by not investing in Pinterest.
Rose, who started by working for Google in their Google Plus division eventually found his home over in Google Ventures stating, “Google Plus for me would have been going back into another start-up and I’ve been kind of burnt out from all of the Digg stuff and all of the other things I’ve been doing for the last 7 or 8 years”. According to Kevin, Google allows you to really find your strong points and from that you can choose a place in the company where you feel you can have the largest impact. Internally, they call it the “Googley thing to do”.
Current news also has it that Google Ventures likes to undercut existing valuation caps for seed rounds but Rose insisted that Google’s M.O. is not lowballing. “We have a $200 million yearly fund, it really doesn’t move the needle one way or another if a company is an $8 million or a $10 million cap or a $12 million cap,” Rose said. He also mentioned that he just simply will not invest in a company that he believes is over valued regardless of the Y Combinator valuation.
“When you drive valuations up you’re getting rid of a lot of good investors,” warned Kevin who went on to say, “if these valuations keep going up it just doesn’t make sense for some of these angels to invest”. “If they’re not investing and they’re not going to make any money then you’re not getting any great mentors and the entrepreneurs are losing out on that”.
Pinterest CEO Ben Silbermann offered Kevin an angel investment opportunity at a $5M valuation to which Kevin passed on even though the start-up had great traction 3 to 4 years ago.
What that translates to today based off of Pinterest’s current valuation at $1.5 Billion:
- initial $25k investment would now be worth $7.5 Million
- initial $50k investment world now be worth $15 Million
Today at Y Combinator pitches we are seeing companies valued at 3 times the amount of Pinterest with way less traction, commented Rose.
