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>> VCs use portfolio theory. I dont buy this argument. I used to help manage a large portfolio. Portfolio theory does not mean that you can put in garbage and

>> VCs use portfolio theory. I dont buy this argument. I used to help manage a large portfolio. Portfolio theory does not mean that you can put in garbage and magically get more than garbage (actually, it did with CDOs, since they were tranched, but even that ended up tragic if you recall 2008.) Portfolio theory, esp with A-round and beyond VC where your portfolios are smaller (~15 to 30 entities) requires due diligence.

manigandham 7y ago
You don't know it's garbage. Disqualification is easier than qualification. Funds say "no" to the obviously bad or incompatible. Whether something is a "yes" takes research and is never certain. The entire game is picking the winners so how much are you going to dedicate to predicting that (which is massively unpredictable) vs just investing in another shot that may be a winner.