[dnautics]

so due diligence for infotech startups maybe doesn't make sense but wouldn't at least a "first pass no phebotonium" filter mean better likelihood of returns for hard sciences?

I have been closely watching indie bio do their accelerator and I'd say a full 60% of their startups are phlebotonium, or at least "this is not a crazy idea, but the choices you have made are totally crazy".

[manigandham]

Let's say fund of size X divided by N companies = Z amount invested per startup. 0.1% of them will return 5X.

So while you might disqualify some poor companies in the 99%, what are the odds you don't just get another poor company? The odds that the money you didn't spend will now go to a successful company doesn't really change since the hyped companies would already have the money and the rest are a complete crapshoot.

Meanwhile, how much does that diligence cost? If it's more than Z across your portfolio then you're actually down a shot and have lowered odds for the whole fund. If 99% are going to fail anyway, why spend more money just investing in a different 99%? Remember the entire fund has to be invested, you can't return or rollover the money so this is actually the optimal strategy. It's strange math but it works.