Here's how desperate some investors are to get into hot tech companies like Pinterest

There's a new investment trend in Silicon Valley that shows how overheated the investment market has become for hot startups.

The Wall Street Journal reports today that venture capital firms like FirstMark Capital and Andreessen Horowitz are raising special "impromptu" funds from a few select investors, specifically to invest in late rounds in fast-growing companies with high valuations like Pinterest.

Sometimes, these funds are coming together in days.

For instance, FirstMark reportedly wanted to invest in Pinterest's last round, which closed last month. But with Pinterest valued at $11 billion - more than double the value it had in May 2014 - FirstMark wasn't comfortable making the investment from its latest $225 million fund. If Pinterest didn't pan out, it would place the whole fund at risk.

So, the Journal reports, FirstMark created a special new fund just to invest in Pinterest. It raised $200 million from seven investors in just three days, then invested that alongside some money from its older fund.

These special funds are known as "special purpose vehicles," and they're also being used for smaller investments. For instance, former Google and Twitter exec Elad Gil reportedly raised "tens of millions of dollars" from employees at Facebook, Google, and Twitter to invest in Instacart's last round, which valued the company at $2 billion.

There are several sets of risks here.

First, venture firms typically spread a fund over a lot of different companies over many years to spread risk. A bet on one company at one moment in time is much riskier for the investors in that fund.

Second, the investors in these funds are often wealthy private individuals - not the huge pension funds or universities that are typically the investors (limited partners) in big VC funds.

These are the same kinds of folks who sometimes make angel investments in very early-stage startups. But these big late-stage rounds can be riskier than the early-stage seed investments because if the company goes south, there are a lot of bigger and earlier investors who will (probably) get paid back first. (It depends on the specifics - some late stage investors get special preferences that make sure they're made whole, as happened with the last investors in Box before it went public.)

Benchmark Capital's Bill Gurley warned specifically against these kinds of investments in February, calling out both preferential investments for earlier investors, and risks not found in public companies, like opaque financials. He said the tech market is in a "risk bubble."

Finally, these startups probably aren't getting much help - other than money - from these investors. An experienced VC can give useful advice in tough situations, help with introductions that could be useful in hiring or for exits, and so on. By taking late-stage money from inexperienced investors, companies are passing on a chance to get this kind of help.

But this is what happens in a world of huge-value private companies who want more investment to keep growing, but are not yet willing to turn to public markets to get it.

Disclosure: Marc Andreessen, co-founder of Andreessen Horowitz, is an investor in Business Insider.

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