Venture Capital is fundamentally incompatible with finding outliers, the reason why innovation is now relegated to generating mind-numbing advertising clicks, fixing self-induced security risk, and fabricating socioeconomic foolery.
Venture capital has turned subprime (the term I first attached to venture capital some 10-years ago), meaning it has turned uniform in how it evaluates innovation. And uniformity is incompatible with finding outliers of innovation.
Hence, as the theory that determines what can be discovered (Einstein), the innovation venture capital attracts has become, by definition, subprime, relegated to proliferating evolutionary poison such as excessive and mind-numbing propaganda yielding click-bait advertising income.
Entrepreneurs are made to believe a hyped downstream sub-optimization of an existing normalization of truth can quickly be sold to a chain of greater-fools as a new and better normalization of truth promising to spawn renewable socioeconomic value until the public as the last in the chain painfully finds out post-IPO it does not.
The point is, the way we currently deploy risk in venture capital is fundamentally incompatible with finding outliers of unprecedented upside — the very reason why venture capital failed to spot Tesla until it showed up in their rearview mirror.
And no, distribution does not change risk, risk determines distribution, in that order. So, big checks from large follow-up funds confounding such cause and consequence are a mindless ruse to risk.