Should early-stage investors make few concentrated bets or spread across many companies?

Nick Chirls · Sep 6, 2024

Getting antsy during long gaps between investments — worrying about deal flow and what LPs think — is a major source of investing mistakes, and investors should learn to recognize and resist that pressure

It is human nature to start doubting whether you're seeing the right things or overthinking, and those internal voices are toxic; better to listen to them, understand where you are, and stay patient

Scope: particularly acute for low-volume investors making 3-5 investments a year

51:29 20VC: Why VC is a Ponzi Scheme Today | Why Most VCs are Bankers | Why Big VCs Ruin Startups | Why Incentives in VC are Broken | Why American Dynamism is a Tool for VCs to Raise Money with Nick Chirls, Asylum Ventures

David Cahn · Oct 27, 2025

Taking a long enough time horizon in AI gives you more opportunities to find exceptional companies; the goal is to find one or two investments a year you really love, not ten

Companies with real customer love and something people need navigate any market environment; 2021-era companies like Databricks came out the other side strong

15:40 20VC: Sequoia's David Cahn on The Winners and Losers in AI | The $0-$100M Revenue Club: Is Triple, Triple, Double, Double Dead? | The Future of Defence: Who Wins and Who Loses | How to Analyse Margins and Growth Rates in a World of AI

Gokul Rajaram · Mar 16, 2026

Concentration is an early-stage investor's friend because it removes the pressure to do ten deals a year — four deals a year and 15 companies in a portfolio is enough

Fewer required deals means you don't have to chase priced-up rounds, though concentration is also an enemy if you pick wrong

Scope: can be your enemy if you pick wrong

49:29 20VC: The 8 Moats of Enduring Software Companies: How to Analyse for Durability and Defensibility in a World of AI | Why Dropouts are "AI Maxing" the World & Remote Early-Stage Companies are Dying with Gokul Rajaram

Gokul Rajaram · Mar 16, 2026

Funds running 30-40 company portfolios are under damaging pressure to invest roughly one company per partnership per month, whereas concentrated funds buy themselves time to meet companies, think, and help founders

A 30-company fund deploying over a three-year initial period mathematically means about one deal a month; Green Oaks has done about 65 companies across seven funds, and his own six funds hold 65 companies at 11 per fund

Scope: based on a three-year initial deployment period

58:12 20VC: The 8 Moats of Enduring Software Companies: How to Analyse for Durability and Defensibility in a World of AI | Why Dropouts are "AI Maxing" the World & Remote Early-Stage Companies are Dying with Gokul Rajaram

Harry Stebbings · May 8, 2024 · hedged

An angel putting 250 into one company while writing 25 checks elsewhere is incredibly dangerous and high risk, even if it might work

Scope: 'it may work'

40:27 20VC: GV's Tom Hulme on Why Investing in Foundation Models is like Investing in "Power Stations", The Conventional Wisdom in VC that is BS & Lessons from a 24x Angel Track Record, 255x on Robinhood and Making Billions on Uber

Lucas Swisher · Feb 23, 2026

Spray-and-pray does not work at the early or early-growth stage; you must make very few investments and cannot afford to back the wrong horse

Because so few companies create the value, being in the wrong horse or wrong market means misallocating both capital and your time

Scope: applies to early and early growth stage rather than scaled platform investing

21:33 20VC: Inside Coatue's $70BN Machine: Why Price Matters Least | Why Mega Markets are the Most Important | How to Assess Durability of Revenue and Margins in AI with Lucas Swisher

Lucas Swisher · Feb 23, 2026

Founders Fund's ultra-concentrated strategy of backing a few companies has been an incredible strategy over time.

51:16 20VC: Inside Coatue's $70BN Machine: Why Price Matters Least | Why Mega Markets are the Most Important | How to Assess Durability of Revenue and Margins in AI with Lucas Swisher

Marc Lore · Jul 12, 2021

A roughly $500M fund should make about 15 investments, putting ~$30M into each across a $10M seed and a led $50M round, to end up owning ~40% of companies it effectively created

Leading the follow-on with $20M makes the round easy to get done, the capital guarantees the company can recruit great people, and you own 40% of a company already worth $100M+ that you made happen from nothing

Scope: assumes a chief people officer and the right founders are in place

26:55 20VC: Jet.com's Marc Lore on How To Assess Human Potential and "The Resume Test", Why Chief People Officer Should be One of Your First Hires and Why We Need a New Type of Venture Capital

Julio Vasconcellos · Sep 23, 2022

The right answer is a relatively concentrated early-stage portfolio of around 20 companies rather than 100, because you can narrow the universe even if you can't pick the single winner

At the early stage you can't say which company will be the next MercadoLibre, but you can be confident one of 20 will be; going to 100 companies dilutes returns, time and attention

Scope: not advocating three all-in positions; the right balance differs by fund, manager and geography

30:09 20VC: Why Greed is the #1 Enemy of Venture Returns, Why Not Enough VCs Play to Win and Lessons from Scaling to $100M and 1,200 Employees and Then Cratering with Julio Vasconcellos, Founder @ Atlantico

Tomasz Tunguz · Apr 21, 2023

A highly concentrated portfolio — 12 to 15 companies with 40-50% or more of the fund in the top three holdings — is an optimal venture strategy for a thesis-driven investor

Monte Carlo simulations on historical venture data produce several dominant strategies and this is one of them; it fits a thesis-driven approach where deep understanding of a space gives you the conviction to keep investing behind a company

Scope: One of several dominant strategies, not the only one; Depends on being thesis-driven and going deep in a space

17:18 20VC: Who Wins in AI; Startup vs Incumbent, Infrastructure vs Application Layer, Bundled vs Unbundled Providers | From 150 LP Meetings to Closing $230M for Fund I; The Fundraising Process, What Worked, What Didn't and Lessons Learned with Tomasz Tunguz

Phin Barnes · Oct 2, 2023

A concentrated, intentionally non-coverage portfolio is the right early-stage model — the goal is finding 30 amazing companies, not being in every amazing company

You will only ever have a limited number of companies in your portfolio, so opportunity cost forces selectivity rather than coverage

45:25 20VC: The Services Model of Venture Capital is Broken, The Best Founders Do Need Help, The Most Important Signals to Assess When Meeting Founders & Why Kids Bring Less Happiness and More Joy with Phin Barnes @ TheGP

Max Altman · Nov 21, 2025

A concentrated, ownership-sensitive seed strategy fits his firm better than an index approach

They aren't everywhere geographically, do almost no PR, and don't cover the whole universe, so they're not set up to produce a smattering of 10-12 unicorns; he also prefers spending more time with each founder

Scope: about Saga specifically, doing 20-25 checks

34:12 20VC: Max Altman on The New Seed War: Can Anyone Compete with Sequoia and a16z | Leaving $2BN on the Table with Reddit | Lessons from Backing Rippling at $25M Post | Why Climate Tech is a Mirage and Disaster

Wesley Chan · Aug 22, 2022

More shots on goal beats concentration — the more you concentrate, the less chance you have of being in a Canva-like company, and capital can always be concentrated later through other vehicles.

A company like Canva returns 10x the fund but you have to be in it; statistically you need enough positions to have high confidence of returning the fund rather than doing three companies and praying one works.

Scope: he credits the approach to Aydin at Felicis and his own seed-fund background at GV

22:09 20VC: Why Market Always Wins Over the Founder & Why I Do Not Do Market Sizing | Why it is not the Best Time to be Investing but it is the Best Time to Have a Fund & The Type of Deals to do Today | Why The Best Founders Have 100 Year Plans with Wes Chan, C

Harry Stebbings · Sep 23, 2022

The questioner states a strong personal belief that, if one runs the numbers, having more lines of diversification beats heavily reserving

30:56 20VC: Why Greed is the #1 Enemy of Venture Returns, Why Not Enough VCs Play to Win and Lessons from Scaling to $100M and 1,200 Employees and Then Cratering with Julio Vasconcellos, Founder @ Atlantico

Shu Nyatta · Jul 31, 2023

A deliberately small portfolio of 12-14 companies is a feature, not a bug, and investors should only invest where the founder genuinely wants them

A small portfolio lets the relationship be personal with every company, and knowing it's only one investment a quarter is clarifying; fighting into rounds without mutual enthusiasm isn't worth it

18:05 20VC: Marcelo Claure & Shu Nyatta on Lessons from Investing $7.5BN at Softbank & Why Dumb Money has Gone, Why "LATAM is Under Construction" and the Next 10 Years Will Be the Best & Investing Lessons from Missing Nubank & OpenAI & Investing in FTX

Oren Zeev · Feb 2, 2026

Being more collaborative and getting into more deals is not desirable — better to do fewer investments where you are the main backer and matter to the company

He wants the deals he does to matter and to be as meaningful as possible to the company

54:23 20VC: 50% of Funds Will Go Out of Business | Why Growth Expectations Today are BS and Will Not Last | Why Oren Zeev Takes $0 Management Fees But 30% Carry | Why GPs Should Not Tell LPs Their Strategy

Mo Koyfman · Aug 8, 2022

Roughly 25 deals is the right portfolio size for a fund doing both seed and Series A leads

Doing both seed and Series A investing and leading or co-leading rounds sets the check sizes and therefore the number of lines

Scope: specific to Shine's seed-and-A leading strategy

15:07 20VC: Investing Lessons from Fred Wilson and Why Small Funds Outperform Large Funds | Why the Secret to Winning in Venture is Splitting Deals |Learnings From the Biggest Hits and Biggest Losses | Why Anyone That Always Does Their Pro-Rata is Wrong with Mo

Harry Stebbings · Apr 21, 2023

At about 23 portfolio companies you capture roughly 82-84% of the benefits of diversification, and a deep thesis-driven approach lets you need less diversification because your picking ability is better

He ran the same Monte Carlo math himself

17:59 20VC: Who Wins in AI; Startup vs Incumbent, Infrastructure vs Application Layer, Bundled vs Unbundled Providers | From 150 LP Meetings to Closing $230M for Fund I; The Fundraising Process, What Worked, What Didn't and Lessons Learned with Tomasz Tunguz

Ophelia Brown · Mar 17, 2023

Because Europe produces a finite and smaller number of quality companies each year than Silicon Valley, an early-stage European fund should be highly concentrated (15-20 companies) rather than building a 30-40 company portfolio

The number of quality companies you can actually be a great partner to in Europe is smaller, so concentration lets you be the best possible partner to each

10:46 European funds should concentrate given the smaller annual supply of quality companies

Ophelia Brown · Mar 17, 2023

The number of companies per fund should be scaled in line with the growth of the European ecosystem rather than set arbitrarily

Fund one held 10 companies, fund two 15, fund three around 20, tracking ecosystem growth

11:33 Portfolio company count should scale with ecosystem growth over time

Harry Stebbings · Feb 23, 2026

In today's market you can afford to back the wrong horse and still get into the winning competitor later

Competitive investing is now common — many investors are in multiple directly competing companies

22:30 You can back the wrong horse and enter the winner later

Michael Eisenberg · Feb 8, 2021

Hedge fund managers deal with risk while venture capitalists deal with uncertainty, and the two demand opposite behaviours

Risk has a band you hedge against to avoid catastrophic outcomes; in uncertainty you accept losing all your money and seek asymmetrical upside, so you diffuse responsibility and make more bets rather than centralizing and pulling in

16:45 Venture deals with uncertainty not risk requiring diffused bets rather than centralized hedging

Michael Eisenberg · Feb 8, 2021

Venture is not a portfolio management business, and traditional notions of portfolio diversification are poorly applied to it

Venture is about picking exceptional individual change-making entrepreneurs; hunting outliers doesn't create diversification, it creates concentration risk around a certain type of person

18:19 Venture is not portfolio management hunting outliers creates concentration not diversification

Taavet Hinrikus · Apr 28, 2025

High-volume angel investing (30–50 deals a year) is an effective portfolio strategy but feels Wall Street-esque and lacks mission alignment

The portfolio performed well, but high-speed deployment didn't feel connected to a mission

4:28 High volume angel investing works but feels disconnected from mission

Brad Gerstner · Oct 10, 2022

The same logic applies to portfolios: hold few enough positions that you can know each one deeply

You can't know a hundred holdings well, just as you can't know a hundred partners well

61:35 Concentrate holdings to know each portfolio company deeply

David Cahn · Aug 5, 2024

Constraints are what force conviction — limiting a partner to one or two investments a year makes them only back companies they will stand behind for life, just as capital scarcity makes companies great

When there is too much capital there are no constraints; scarcity forces people and companies to figure things out

52:46 Limiting investment count per year forces genuine conviction not just good picks

Will Quist · Sep 12, 2022

A seed fund can be justified with either 10 concentrated bets or 50 diversified ones, but Slow chooses to be collaborators and run more bets

There is enough risk in these companies and the upside of winning is dramatic enough that collaboration is worth it; they respect what Josh Kopelman built at First Round

27:09 Both ten concentrated and fifty diversified bets are justifiable seed strategies chose diversified collaborative approach

Immad Akhund · May 12, 2025

You shouldn't start angel investing unless you can afford at least 20-30 investments; doing one or two or five won't work.

You learn through iteration across successive investments, and seed investing is unicorn/decacorn hunting where even great pickers need a diversified portfolio of bets to hit an outlier.

19:44 Need a diversified 20 30 check portfolio to work as an angel

Reid Hoffman · Dec 7, 2020

Angel investing differs from venture investing: an angel invests like a friend, is not as invested or married to the project, and spreads money across many different bets

Because the venture investor joins the boat and is committed to getting it to port, they must take a much smaller number of concentrated positions

27:47 Angel investing diversifies like a friend while venture must concentrate due to board level commitment

Jude Gomila · Feb 11, 2020

Spray and pray is the wrong frame for seed investing: high volume is necessary but every individual shot should still be an aimed, rational decision

'Praying' implies you're not being rational or logical, and 'spraying' implies shooting without aiming — he'd rather have many bullets and time while treating each shot as a sniper rifle

13:53 High volume investing should still be individually aimed not random spray and pray

Oren Zeev · Feb 2, 2026

A 20% cap of a fund in a single company is a reasonable concentration limit, double the ~10% industry standard

When you have a winner, concentration is what makes the difference to returns, so it's better to be concentrated in the best deals you can find

26:15 Twenty percent of fund in one company is the right cap

Cyan Banister · Oct 19, 2020

The risk-averse style of deliberating and doing only one or two great deals a year can work, but it is extremely hard and requires analytical, quantitative ability

She admires investors who do it because it demands a skill set she doesn't have; she is qualitative rather than data-driven

9:31 Few deliberate bets per year requires rare analytical quantitative skill

Larry Aschebrook · Jun 16, 2025

A concentrated portfolio of a handful of companies is preferable to 50 positions because liquidity is what LPs actually need, and you can't generate velocity of capital across a wide book

He was managing other people's money in small amounts, LPs who ran their own businesses wanted their capital back quickly with optionality, and holding 50 companies makes it impossible to get liquidity

13:40 Concentration enables liquidity and capital velocity for lps

Larry Aschebrook · Jun 16, 2025

The right secondary model is concentrated — ten companies making up 90% of risk, built via many micro-transactions — not indexing 200 positions with no information to arbitrage pricing

Large concentrated positions require peers to see unique value in you; and the operational muscle memory and back office required for 50 transactions per position isn't replicable by others unless you're motivated by carry rather than management fees

58:00 Concentrated secondary positions built via many transactions beat indexing hundreds of positions

Max Altman · Nov 21, 2025

The non-lead, low-ownership seed model that skeptics said couldn't work has been proven out by SV Angel and replicated by Box Group

Critics said such funds lacked ownership and would need ten unicorns to work; SV Angel went and hit them

33:22 Non lead low ownership index model is proven