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Maybe, but I'm skeptical that you could make a significant return on a collection of smaller (let's say $100M) companies. Statistically, most of them are going
by RussianCow 7y ago
Maybe, but I'm skeptical that you could make a significant return on a collection of smaller (let's say $100M) companies. Statistically, most of them are going to fail, so the return on each of the successful ones needs to be pretty high in order to come out on top, but I just don't see how that could be the case unless their starting valuations are incredibly low. I can't see that being nearly as profitable as a single $50B unicorn.
- kartickv 7y agoYou'd be right if the valuations of startups were independent of their eventual market size. In that case, it makes no sense to invest in a smaller company. But if you're going after a niche market -- a computer vision-based tennis coaching app, for example -- your valuation will necessarily be lower than a company with broad appeal. So instead of saying, "No, that's a small market" you could invest at a lower valuation and still make the same or higher return as with a unicorn.