

Small science, big diseases - mathattack
http://ideas.time.com/2014/02/24/small-science-big-diseases/

======
gjmulhol
This is fundamentally a play in how smaller companies can take higher risk,
more agile approaches to solve big problems. When a VC looks at this, he or
she sees an asymmetric risk profile: huge risk bounded by losing everything.
For example, if an investor puts in 100k, the most he or she can lose is 100k,
but the upside is much much more than 100k. For me as a founder, though, this
is the reason I love startups -- they can change the world. Taking big risks
and having world-changing (even more than monetary) success is something that
startups can do that mature companies sometimes struggle to do (with
exceptions, of course).

~~~
mathattack
Absolutely. It's like a very out of the money call option. Doesn't cost much
to play, but huge upside.

The strange thing is this goes against some traditional thinking, which says
that larger firms are more able to bear risk than smaller ones since they can
diversify away the costs of failed projects. To your point, it's actually the
VCs that do this diversification rather than the large companies.

