One example of a type of company where decacorn-or-nothing investing doesn't work is biotech / pharma, which is the second biggest VC sector after pharma
Cash on cash returns from seed investing in the biggest biotech companies are an order of magnitude lower than tech. Series a investments in the biggest biotech startups are about half that of tech. This is despite the fact that the companies grow to comparable sizes on comparable amounts of capital [0]
Value inflection happens later in biotech than software. Software startups can get product market fit on seed capital, but the biggest value inflection in biotech is human proof of concept, which costs tens or hundreds of millions
If you invest in biopharma you should focus on lower loss rates (ie do good technical diligence) and concentrate bets in winning companies
Cash on cash returns from seed investing in the biggest biotech companies are an order of magnitude lower than tech. Series a investments in the biggest biotech startups are about half that of tech. This is despite the fact that the companies grow to comparable sizes on comparable amounts of capital [0]
Value inflection happens later in biotech than software. Software startups can get product market fit on seed capital, but the biggest value inflection in biotech is human proof of concept, which costs tens or hundreds of millions
If you invest in biopharma you should focus on lower loss rates (ie do good technical diligence) and concentrate bets in winning companies
[0] https://www.baybridgebio.com/blog/anatomy_of_a_decacorn.html