Professional investors, particularly in venture capital, often emphasize one surprising aspect of investing: the greatest regret comes not from losing money, but from missing lucrative opportunities. The logic behind VC investments is straightforward yet powerful: one successful venture investment can generate returns that far outweigh multiple failures.
Missed Opportunities Outweigh Losses
In venture capital, a single home run can deliver returns of hundreds, even thousands of times the initial investment. For instance, imagine losing ten investments in a row—each of them total losses—only to see the eleventh generate a 100x return. This single success not only covers past losses but significantly boosts overall profitability.
Losses, especially for venture capitalists who systematically diversify their portfolios, are typically manageable. Unlike retail investors who might put all their net worth into a volatile asset such as cryptocurrency and lose significant amounts, professionals spread their risks strategically. Their real pain point is missing the "big winners," the rare high-potential startup investments that generate enormous wealth.
Every Investor Has a Story
Almost every seasoned investor has a personal story about a missed opportunity. These stories serve as important lessons about the value of bold decision-making and calculated risk-taking in venture capital. Often, missed opportunities in startups stem from hesitation, last-minute doubts, or misaligned investment mandates. Every venture capitalist has a tale of how they let an opportunity slip away, and I have many of those stories. However, I want to share just one that happened recently.
We evaluated a company called Colossal Biosciences, founded by Ben Lamm. Colossal aimed to bring extinct species back to life, starting with the woolly mammoth, to promote biodiversity and conservation. On the surface, the idea was both intriguing and groundbreaking, but its risks were clear.
My Missed Opportunity: The Colossal Biosciences Story
In 2021, we met with Ben Lamm and evaluated the startup thoroughly. The team boasted strong scientific credentials, partnering with George Church, a renowned scientist from Harvard University. The idea was ambitious, scientifically challenging, yet potentially revolutionary.
However, we hesitated. The valuation at a $30 million cap appeared steep, especially during the tightening venture capital markets of 2022. Moreover, we were skeptical about the scientific feasibility and unclear about the go-to-market strategy. Questions lingered about monetizing the project even if they succeeded in reviving the woolly mammoth. Despite Lamm's undeniable charisma and strong selling skills—characteristics generally considered positive for investment—we ultimately passed.
Fast forward to the present, Colossal Biosciences is now valued at approximately $10 billion, having raised over $400 million in funding rounds. Had we invested initially, even after subsequent dilution, our returns could have reached a staggering 200x. This case exemplifies what venture capitalists look for in startups: traction, proof of concept, and enormous market potential.
Lessons Learned from a Missed 200x Return
Reflecting on this missed investment reveals key insights for investors:
- Bold Ideas Often Carry Hidden Value: Visionary projects addressing big, even seemingly impossible problems can dramatically alter market dynamics and deliver exceptional returns. This is why venture capital firms prefer to invest in ideas with a large serviceable obtainable market.
- Founder Credibility and Marketability Matter: Founders who can effectively generate buzz and raise substantial capital, especially repeat entrepreneurs, deserve careful consideration. This is a crucial part of the team assessment process.
- Manageable Risks Should Encourage Boldness: Diversification mitigates risks, so investors should adopt a more aggressive stance when faced with opportunities presenting high potential upside. This approach is central to the investment thesis of many successful venture capitalists.
Go Big, Invest Boldly
The core takeaway for venture capitalists is straightforward: do not shy away from bold, high-risk investments. Yes, you may encounter failures, possibly even multiple failures. However, the rare successes can substantially enhance your portfolio performance and overall net worth.
As illustrated by the Colossal Biosciences example, investing in new businesses with high profit potential and visionary projects with capable, persuasive founders targeting large-scale problems can deliver transformative results. Even if you're right only once in ten attempts, that single success can exceed market averages dramatically.
In venture investing, missed opportunities—not controlled losses—constitute the real venture capital regrets. Embracing boldness and staying open to unconventional opportunities can significantly boost your investment returns and professional satisfaction. This is why many angel investors and venture capitalists focus on early-stage companies with high growth potential.
