[bigiain]

Sure, but "3% chance of 100x returns" is firmly in "dreamer" territory. Best guess I can find is that it's at least an order of magnitude smaller than that:

https://angel.co/blog/what-angellist-data-says-about-power-l...

A 0.3% chance of a 100x return is a 70% loss. (And over 10 years, a 3x "return" is pretty much just breaking even anyway)

The "rational players" in this game are the VCs who're raking 2%/year from the investors in their funds (whether they succeed or not), and also skimming their 20% liquidity event bonus - so they benefit from the winning funds without ever having any personal financial risk in all the losing funds.

In my opinion, pretty much every other tech startup investor could be categorised as one or more of 1) Dreamers (who genuinely believe _this_ one is going be "their unicorn!!!"), 2) Lottery players (throwing away a hopefully insignificant enough amount of money to them, in return for the entertainment of maybe winning big one day) 3) Horse race gamblers (someone who believes they're better informed than 99% of the other investors in their chosen horse/jockey/startup/founder) 4) early stage employees who wittingly or unwittingly accepted vesting options as part of their renumeration (these are arguably somewhere on the spectrum between #1 and #2) or possibly 5) insider traders (pretty much a legally actionable case of #3).

(And I say this with the hindsight of having been the first four of those - some of them several times over...)

[arcticbull]

I don't think #5 exists for private companies.