I am green in the VC world. Not as green as the Medium icon but when I look at the VC and Accelerator landscape I don’t feel as green. What I recognize is most have a bit of laziness, a bit too much capital, and too much pressure to hit a home run. Maybe these firms are filled with learners like Emil Wallnér defines in “Stop Learning”. What all this leads to is the Lotto Strategy. I have discussed this before using various sites. Most notably on my Strategy page.
I define a VC and Accelerator Lotto Strategy as this: A strategy that reviews as many investments as possible and then invests in as many as they are comfortable with. The end goal is to maximize the chance of success by investing in as many startups as possible while being content knowing the vast majority will fail. 1 home run will make up for 10 strikeouts. Buying 20 lottery tickets gives you better odds than buying 1.
Being “comfortable with” is a broad stroke and very much applied investment thesis that is the most important Lotto Strategy catalyst after capital. Maybe it happens by mistake but it sure doesn’t seem that way. What I see is VC’s and Accelerators with more money than they know what to do with. A slow and steady approach isn’t going to work for them. They invest and invest and invest. They cause market irregularities, bubbles and other inefficiencies. But what is never discussed and probably impossible to quantify is how many failures this strategy causes. I would gander it’s a high number because startups are basically treated like cows at the slaughter house. Get them in the door, push them down the line and if the cow is ready or not there will be a slaughter. Of course some do win prizes before slaughter and get to live a good life. Although that hook in Angus’ nose doesn’t look too comfortable.