You have too much faith in the efficiency of the market in a field with: a) lots of players making decisions based on very imperfect and very incomplete inform

You have too much faith in the efficiency of the market in a field with: a) lots of players making decisions based on very imperfect and very incomplete information. b) very large consequences for random events. Yes, there are many important contributing factors to the success of a company besides luck, but the difference between a mere success and a multi-billion dollar homerun involves a large degree of luck. These sorts of exits are often associated with winner-take-all markets where randomness is more important. Example: I play a competitive game against you where you beat me 60% of the time because you are more skilled. Given the option, I would much rather play one game against you for $100 than one hundred games with $1 on the line each time. I contend that the one-game option is more analogous to to businesses with lots of "lock-in" or "network effects". c) a relatively short history - if a funding cycle for a VC is several years, and most venture firms haven't been around no more than a couple decades, that's not a lot of generations for funding strategies to prove themselves, especially in the presence of randomness (see b).