Sure, VCs could invest in less risky, less rewarding companies, but then they wouldn't be VCs. VCs are an asset class defined by their risk portfolio. Taken on

Sure, VCs could invest in less risky, less rewarding companies, but then they wouldn't be VCs. VCs are an asset class defined by their risk portfolio. Taken on their own, they are clearly using a suboptimal strategy. But no one invests all their money in VCs. As part of a diversified portfolio, it's actually their high risk strategy that hedges againsts other kinds of risks (like the risks that the old, stable companies underperform).