Different VCs work at different stages and take on different types of risk depending on what they know and have done. Roughly: The earliest investors (mostly

Different VCs work at different stages and take on different types of risk depending on what they know and have done. Roughly: The earliest investors (mostly angels, usually not VCs) are taking the risk of "can you ship?" The next round (some angles, but mostly VCs) are taking the risks of "is there any market for this?" and "can you sell to a few customers in that market?" The next round (almost entirely VCs) are taking the triple risks of "is this a real market?", "can you sell to LOTS of customers?" and "can you scale a business quickly?" And every round (exclusively VCs) are taking the dual risk of "can you expand your customer base into adjacent segments?" and "do your economies of scale eventually work?" Unfortunately, no stage proves the next one, sometimes what looked like market early on turns out not to be one (many of the dotcoms), sometimes the math never works out (MoviePass, 98% of the dotcoms), sometimes the people who got you there can't get you to the next level and can't admit it, and there's the occasional frauds that slip through (Theranos). There are hundreds of other, more nuanced reasons investments fail but those are the big ones.