>Invest in more startups/less cash in each. The assumption today is that VCs want to own 20-25 percent equity of any startup in which they invest, assuming they

>Invest in more startups/less cash in each. The assumption today is that VCs want to own 20-25 percent equity of any startup in which they invest, assuming they have cash to follow up. The reasoning being, if there actually is a realization event (exit/IPO), they want to score big. This isn't the reasoning behind it. The actual reasoning is more like constraints in number of worthwhile investment opportunities. If the fund has $100M to invest and a hundred startups that meet their criteria, the fund has to average $1M per investment in order to invest all the money that they want to. If they have $200M, the average investment has to go up to $2M. VCs are already talking to as many companies as they can. Investing in more opportunities means lowering their standards. Assuming that VCs are rational about their standards, this is a poor choice.