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Lets imagine we both have a very rich uncle that gives each of us $50m to invest in startups.

We then go off and invest $250k in 200 startups each.

After 12 months we find out that all my investments failed and I lost all my $50m and luckily enough for you, one of your investments succeeds giving you a ROI of $78m.

Now, your fund is up $28m and you look like a titan of the industry, whereas for me, well no one knows about me because I'm the loser, and losers don't get press coverage.

Is it fair to focus on the single winning investment you made and cry foul? Is it fair for me to be upset that you earned a whooping $78m from just one lowly $250k investment?

I don't think so. If you look at the total of all investments that occurred, $100m, having a single return of $78m seems quite reasonable -- hell it's not really that great in this example.

So now think about all the money that's invested in startups, across all the VCs, across all Angel investors, across all founders using their life savings. Isn't that a really huge number?




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