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Santhosh Gandhi

Venture Capital Focu... • 3m

If you’ve ever wondered why VCs invest in risky startups instead of safe businesses, it’s because of something called the power law. And trust me, if you understand this, you’ll see why most VCs don’t 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. That’s power law in nutshell. Now, Let's apply this to startups. If a VC invests ₹10 crores in 10 startups, and 9 return nothing, but 1 startup grows 100x and becomes worth ₹1000 crores, that’s 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 doesn’t promise massive scale and power law returns, VCs won’t be interested.

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