[JumpCrisscross]

> while speed is good for startups, "time diversification" used to be considered a good thing for VC investors, who really are playing a portfolio game

To expand on this, as the article notes, the old game might have been (stylised) ten Series A investments, three of those raise a B and one raises a C. Today, all ten raise a B and then three months later a C. Valuations (perception of risk) go up (down). But has actual risk been reduced?

The Information‘s “The End of Venture Capital As We Know It” [1] argues that yes, software start-ups have become less risky over the past decade. I agree with this in part. (Cautiously. I make more money when Silicon Valley valuations go up, so of course I’d like that argument. It also sounds like “this time is different.”) Even if true, we may have overshot the mark. In a way, those mis-placed follow-on bets on doomed unicorns are VC’s analogy to leverage—it’s amplifying a single company’s effects on the portfolio.

[1] https://www.theinformation.com/articles/the-end-of-venture-c...

[lumost]

Objectively, software bets are less risky than 20 years ago. There are more well understood business models, more ways to reach customers, fewer technical risks (putting a consumer website meant dropping 7 figures on hardware and hoping you had the right team to make things work), and a better understanding of what a defensible business looks like.

On the flip side a reduction in risk is no guarantee of success, there are new risks related to having ~100 copy cat companies - or having your business replicated by a mega-cap. Lower risk means lower barrier to entry.