What are ways to bet AGAINST the value of some startups?

[semperfrosty]

it seems like instead of picking the <0.01% of startups that turn into "unicorns" etc out there, if there's a way to just bet against the value of baskets of these things, it may be even more wildly profitable

the fact that some (ok, many lol) startups have uninspiring ideas + unsustainable/ cash-flow negative business models even in the best of times + many macro headwinds + some truly priced to perfection++ valuations, make them seem very attractive to bet against

what are some ways of doing this?
eg. i was thinking a few theoretical options would include,
- Shorting SoftBank stock
- Borrowing private employees' stock to enter into a total return swap/ sell to another party, kind of like actual short selling but just with the private shares, so that if the company gets their paper value marked down, the transaction makes money
- Waiting for the companies to fold, then sourcing distressed real estate

also, someone should seriously consider starting a hedge fund doing structured bets against these startups, kind of like CDS against subprime mortgages, only against subpar startups (be like >80-90% of the pool). I bet that'd probably a strategy that would ironically outperform many actual VCs out there

Its a good trade idea.

Don't rule out crypto either.

My theory is that the age old 'rising tide lifts all ships' does not apply in this space.Moreover,I believe that investors in this space simply move losing/dwindling investment funds to blue chip crypto,rather than outside the space,creating a potential hedge or perhaps a dual bet.

I've been looking at shorting parabolic 'shitcoins' for a while now.

 

[nitrene]

In hindsight he could have shorted Silicon Valley bank as a proxy. As the startup valuations went down they couldn’t get equity funding to pay their bridge loans. But that trade is done.

Very true. I had friends who worked in both Silicon Valley Bank & First Republic and they were imminently linked to the whole VC market.

Believe it or not my friend at First Republic told me years ago that they had an informal branch inside Facebook & Google. I told him that was very risky (this was in 2018).

Silicon Valley Bank had a lot on informal investments in the Fintech craze especially in the SF bay area & the Seattle area. That is the reason their stock traded like a profitless tech startup.

 

[pinetboltz]

thx, i might go with the distressed real estate idea as it seems easier to execute & less open to manipulation

if anything, the previous cycles already showed so many of these startups cannot deliver anything close to the hype they promised

this time the stuff they are pitching are even more fantastical - ie. my bet is that, in the aggregate, the fiction they are writing for the VCs/LPs has little chance to coming to fruition, in both the financial payoffs & actual deliverables
- eg. even with self-driving cars, where untold billions have been poured in by the largest tech groups, it's still being worked on after a decade plus of constant grinding and cash burn
- with the smaller companies led by 2nd tier people trying to "solve the world's problems" and "reinvent artificial general intelligence" with only a few hundred mil runway, yeah, i don't buy it

maybe a good strategy is to hoard cash while waiting for all the factors to align, really holding out for insane bargains at the stage where they surrender & do fire sales, before moving in to target distressed real estate
- for GDP to slow/ ease etc - already seeing pockets of slowing inflation
- some tech companies already in layoffs/ hiring freeze mode
- high mortgage/ interest payments surely not helping the frothy operators

timing that market would be important, but once in, i think it should be a max of few years before it pays off, as the cycles always repeat in SF where new hopefuls reenter with dreams of glory