iZora's CEO identifies a "sweet spot" of three to five high-quality programs. This size is large enough to benefit from risk diversification but small enough to avoid losing focus and stretching resources thin. It provides a concrete framework for balancing ambition with manageable execution and capital requirements.
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Allocate resources strategically to ensure both short-term stability and long-term innovation. Dedicate 70% of effort to the core business (1-2 year impact), 20% to riskier medium-term bets (3-5 years), and 10% to high-risk moonshots.
Unlike tech investing, where a single power-law outlier can return the entire fund, biotech wins are smaller in magnitude. This dynamic forces biotech VCs to prioritize a higher success rate across their portfolio rather than solely hunting for one massive unicorn.
Thrive Capital's strategy of making a few large bets is not just for financial returns. It's an ideological choice to align with "life's work founders" for whom their startup is a portfolio of one. This ensures every win feels great and every loss hurts, creating true skin in the game.
Upon returning as CEO, David Cohen implemented a 'better is better, not bigger is better' philosophy at Techstars. This strategic shift prioritizes improving the quality of the investment offer, selection process, and founder experience over simply increasing the number of companies funded. It's a crucial lesson for any organization that risks mistaking sheer growth for progress.
To maintain quality and individual attention, Techstars scales its accelerator model by launching programs in new cities worldwide rather than increasing the size of existing cohorts. Keeping classes small (8-10 companies) allows for deep engagement from the local mentor community, a model that prioritizes depth over breadth in a single location.
The dominant VC narrative demands founders focus on a single venture. However, successful entrepreneurs demonstrate that running multiple projects—a portfolio approach mirrored by VCs themselves—is a viable path, contrary to the "focus on one thing" dogma.
This structure offers fundraising flexibility by appealing to two distinct investor types. Some investors prefer the diversified, lower-risk profile of the central hub, while others want direct exposure to a specific high-potential asset or disease area within a subsidiary spoke. This broadens the potential capital pool.
A successful seed fund model is to first build a diversified 'farm team' of 20-25 companies with meaningful initial ownership. Then, after identifying the breakout performers, concentrate heavily by deploying up to 75% of the fund's capital into just 3-5 of them.
The increased volatility and shorter defensibility windows in the AI era challenge traditional VC portfolio construction. The logical response to this heightened risk is greater diversification. This implies that early-stage funds may need to be larger to support more investments or write smaller checks into more companies.
To avoid the pitfalls of scale in R&D, Eli Lilly operates small, focused labs of 300-400 people. These 'internal biotechs' have mission focus and autonomy, while leveraging the parent company's scale for clinical trials and distribution.
