Feels a lot to me like a similar argument to why there is a complex ecosystem of investment sources for startups that target different stages of company life cycle: angel investors are “small time” and can afford to take high variance bets on fewer companies they know well while large VC firms have lots of money and need to find enough and big enough places to put it all.
On the other hand, there’s some suggestive evidence that seed-stage returns have a power-law distribution with α=1.7 - implying that the best strategy is to filter out the obvious duds and then invest in literally everything else.
Feels a lot to me like a similar argument to why there is a complex ecosystem of investment sources for startups that target different stages of company life cycle: angel investors are “small time” and can afford to take high variance bets on fewer companies they know well while large VC firms have lots of money and need to find enough and big enough places to put it all.
On the other hand, there’s some suggestive evidence that seed-stage returns have a power-law distribution with α=1.7 - implying that the best strategy is to filter out the obvious duds and then invest in literally everything else.