[objclxt]

You are making an assumption that VCs believe all their investments will turn a profit, which in most cases isn't true. You invest in fifty startups, twenty lose money, twenty break even, ten make stonking, huge amounts of profit that cancel out your losses and leave you with a nice pile of cash left over.

You're right: 90% of funded start-ups probably don't deserve the money, and will fail to produce any return at all. That's part of the game. It is not always clear what exactly will make you billions until after it's big.

[mkal_tsr]

Oh for sure, there's definitely a market for the ones you know will fail ... but I'm one of those "take calculated risks instead of just risks". Of those 20 that failed, I wouldn't be surprised if you could have guessed 10 would have failed, and of those 10 making it strong, maybe guess 2-3 would have done well, with everything else up in the air (luck, market, timing, and a billion other factors you couldn't see) ... but even then, I would ask the person managing the fund, "why would you invest in those 10 you knew would fail?". I guess for my, I'm more aligned to the "directed funding" rather than a more "spray-and-pray" approach.

But then again, I don't invest in start-ups so my opinions and any advice should be taken with a huge grain of salt - my forte is software engineering, not finance and investing ;-)

To those downvoting, please explain your reasoning. I can't learn why my opinion is wrong with a simple downvote and no feedback.