[curiousjorge]

In a market where you just need one winner, being overdiversified argument is invalid be cause you are not optimizing for total portfolio return, you want to maximize opportunity and upwards exposure while keeping each downside risk limited. If you make too few bets the numbers are against you. Now this is nothing like spray and pray, you are still dealing with people, at the minimum you need to deal with founders who can be trusted.

[blahblah3]

okay but the less you allocate to your "one winner" the less your portfolio return will benefit from that winner.

[curiousjorge]

It couldn't be worse than allocating a quarter into one company that goes under at such an early stage. the tremendous return comes when others begin buying into it, at worst case, the founder doesn't generate more money than you put in which in this case is very tiny but the equity is still sizable that the next guy paying 10x what you paid and even ipo would have exponential yield. You don't even need to focus on the startup doing well if enough series of investors are willing to buy your shares out. I reminds me of pump and dump which is why I think the latter is unethical but it's unregulated and private market, not exactly the type of people that would go homeless if the start up did go under like when Enron wiped a lot of working ordinary people's pensions.