> So the venture funding is just giving them more rope to hang themselves with? It's letting them make bigger, more costly mistakes?
Think of it more as forcing them to make a high variance bet.
The VC business model assumes that about 1/3 of the companies invested in will go to zero, and another 1/3 will make a below market return on investment. They need the Googles and Microsofts to pay for everyone else, so they just push all of their portfolio into trying to become billion dollar businesses.
Think of it more as forcing them to make a high variance bet.
The VC business model assumes that about 1/3 of the companies invested in will go to zero, and another 1/3 will make a below market return on investment. They need the Googles and Microsofts to pay for everyone else, so they just push all of their portfolio into trying to become billion dollar businesses.