[dougmccune]

I think the thesis is that if you can spread your risk out across 100 companies then the math can work out and it can be a good bet, because you only need one of those to be a huge success and make up for all the failures. But if you are only invested in one startup, it's a horrible bet. So it can definitely make rational sense for the VC but not for the founders.

The corollary is that taking vast VC money is the best way to grow to be a $1B business (obviously there are some exceptions). Again, all these things can be true. If you're a founder and determined to have a billion dollar company, you should take VC money. But your chances of success are miniscule. If, on the other hand, you're a founder and just want to build a $20m business, don't take VC money and the odds improve dramatically.