SV Angel founder Ron Conway made his fortune placing small, early bets on startups that proved to be huge winners.
The best example is Google.
Now, says an admirer in the Silicon Valley startup investing scene, Conway and his firm are making his money in a totally different way.
What he does is…
- Cozy up to the management and investors of hot, growth stage startups.
- Ask these investors and executives if they'd like some liquidity.
- After management and investors say yes – they always say yes! – he goes out and asks his friends with money in Silicon Valley and New York if they would like to invest in a hot, growth stage startup.
- After his friends with money say yes – they always say yes! – Conway creates a fund with their money, also known as a "special purpose vehicle."
- Conway uses the fund to buy stock from some of the early investors and employees of this hot, growth stage startup.
- Conway then accepts thanks from early stage investors for making them rich, and from his rich Silicon Valley and New York friends for including them in a deal that will obviously make them richer in the future.
- He sits back and collects a fee, and waits for the hot, growth stage startup to go through its inevitable exit.
Conway did this with Facebook and Twitter. He just did it with Pinterest. It makes him a lot of money and a lot of friends. It's brilliant. Of the Pinterest deal, our source says: "It was a complete win, win, win for Ron. He makes everyone happy, and he comes off as a genius." Update: There is a perception among some readers out there that this is a "snarky" post, meant to say that we think Ron Conway is "in it only for the money." We don't think that. We think Ron Conway cares deeply about entrepreneurs and innovation. We also admire his efforts to promote gun safety. It's just that, in addition to having these wonderful traits, Conway is also excellent at making money – and that's something we celebrate at Business Insider.
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