Happy Friday. This week, Leo Schwartz published a devastating profile of Yida Gao, a young venture capitalist whose sparkling resumé ticked all the boxes for success: Phi Beta Kappa honors, a stint at Morgan Stanley, and even a teaching gig to succeed Gary Gensler at MIT, where Gao had received his computer science degree.
But credentials are no guarantee of integrity, and as Leo's feature reveals, Gao was willing to cut corners when it came to the rules for handling investor money. Most notably, he raised $200 million for his crypto venture fund Shima from prominent backers like Dragonfly Capital but redirected portions of it to a secret overseas company without telling his investors. While Gao has not been charged with a criminal act, and Shima has suggested the unusual arrangement was a version of "warehousing" that VC funds engage in while raising money, at least one observer suggested it is a violation of at least one SEC law.
