Why do VCs insist on only investing in high-risk, high-return companies?

Sorry this is so short. It’s an interesting topic that I don’t have time right now to do justice. Last week I updated my “am I going to run out of money before I die” spreadsheet, as I’ve been doing every January for ten years. I need to do this because, aside from the paltry […]

Power Laws in Venture Portfolio Construction

Every article that has ever given advice on investing in venture capital has said that you need to invest in a portfolio of companies, because each investment on its own is probably going to be worth nothing and if you invest in just a few you will almost certainly lose all your money. This is […]

Power Laws in Venture

…The more rightward-skewed the distribution is, whether Pareto-Levy, log normal, or some related form, the more difficult it is to hedge against risk by supporting sizable portfolios of innovation projects. The potential variability of economic outcomes with Pareto-Levy distributions is so great that large portfolio draws from year to year can have consequences for the […]