If youโve ever wondered why VCs invest in risky startups instead of safe businesses, itโs because of something called the power law. And trust me, if you understand this, youโll see why most VCs donโt care if 90% of their startups fail! Think about movies. If a producer invests in 10 films, 7 might flop, 2 might break even, and 1 could become a blockbuster that makes 100 times the budget. That one hit pays for all the failures and makes huge profits. Thatโs power law in nutshell. Now, Let's apply this to startups. If a VC invests โน10 crores in 10 startups, and 9 return nothing, but 1 startup grows 100x and becomes worth โน1000 crores, thatโs a 10x return overall. But if they only pick 'safe' startups that give small returns, they might never get that one big win. This is why every startup doesn't need VC money. Even if your business is profitable, if it doesnโt promise massive scale and power law returns, VCs wonโt be interested.
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