A VC's loss on one company is cushioned by a diversified portfolio. For founders and employees, a single company's failure represents a total loss. This asymmetric risk, as explained by Volition's Larry Cheng, should compel investors to adopt philosophies that balance growth ambitions with loss mitigation to protect the teams they back.
Ben Black of Akkadian Ventures learned an expensive lesson by building a reputation for securing deals at a discount. This focus on price caused him to pass on exceptional companies he had access to simply because they weren't cheap enough. He now emphasizes that the quality of the asset is far more important than the discount you can negotiate.
After selling a unicorn stake 12 months too early and missing a 10x return, investor Mark Peter Davis adopted the 'sell half' rule. This strategy provides 'schmuck insurance' against regret. It locks in life-changing gains while preserving upside, ensuring a psychologically positive outcome regardless of whether the asset later goes to zero or to the moon.