An analysis of 547 Series B deals reveals two-thirds return less than 2x. This data demonstrates that a "spray and pray" strategy fails at this stage. The cost of misses is too high, and being even slightly worse than average in your picks will result in a failed fund. Discipline and picking are paramount.

Thrive's data shows the number of companies reaching $100B+ valuation grew faster last decade than those reaching $10B. This suggests it's a higher-probability bet to identify future mega-winners from an established pool of large companies than to pick breakout unicorns from a much larger, riskier field of thousands.

Top growth investors deliberately allocate more of their diligence effort to understanding and underwriting massive upside scenarios (10x+ returns) rather than concentrating on mitigating potential downside. The power-law nature of venture returns makes this a rational focus for generating exceptional performance.

The biotech sector lacks mid-cap companies because successful small firms are typically acquired by large pharma before reaching that stage. This creates a barbell structure of many small R&D shops and a few commercial giants. The assets, not the companies, transition from small to large.

Private VCs with board seats operate deterministically, using their influence to 'make sure' a drug succeeds. Public fund managers operate probabilistically, accepting imperfect information in exchange for liquidity. They must calculate the odds of success rather than trying to directly shape the outcome.

The life sciences investor base is highly technical, demanding concrete data and a clear path to profitability. This rigor acts as a natural barrier to the kind of narrative-driven, AI-fueled hype seen in other sectors, delaying froth until fundamental catalysts are proven.

A biotech investor's role mirrors that of a record producer by identifying brilliant talent (scientists) who may lack commercial experience. The investor provides the capital, structure, and guidance needed to translate raw scientific innovation into a commercially successful product.

'Gifted TVPI' comes from consensus deals with pedigreed founders who easily raise follow-on capital. 'Earned TVPI' comes from non-consensus founders whose strong metrics eventually prove out the investment. A healthy early-stage portfolio requires a deliberate balance of both.

Lior Susan highlights the biggest mental hurdle for former operators becoming VCs: internalizing the power law. Operators are builders wired to fix problems and believe they can turn any situation around. In VC, success is driven by a few massive outliers, requiring focus on winners, not on fixing every company.