Drive-By Deal

When a venture capitalist metaphorically goes through the drive-through rather than a sit-down restaurant, they’re pulling a drive-by deal.

A drive-by deal is where the venture capitalist invests in a startup with the intention to get in and get out quickly. They smelled something in the ether, met the company once, fell in love like a horny teenager, and wrote a check. The venture capitalist is an opportunist...maybe the startup is close to an IPO, or maybe (s)he sees an easy way to pump in value before dumping the startup.

Drive-by deals usually result in startups getting taken for granted. Maybe a startup was put on the market prematurely, or maybe the “value” added wasn’t really valuable at all (smoke and mirrors), which kind of sucks for everyone else at the startup, who might have a long-run stake in it. Ouch.