The "hedging" point is, VCs can't hedge away the risk of making 100 little bets which are only expected to make a mean profit of $10m each (private equity might). They need the triple bagger $1b unicorns to make up for all the firms who don't make it, or their business model falls apart. Just like with trend following. The game has negative expectations; it's only the bet sizing which makes it profitable.
I'll say it a different way: VCs don't give a shit about the company _ever_ making a profit. They give a shit about ther VC making a profit. It's not the same thing at all! VC makes a profit if they invest at good valuations and sell at much higher valuations when the company goes public. The company doesn't have to be profitable! For all they care it will never be profitable! Pets dot com made some VCs a bunch of money!
(thx for kind words -good luck with your startup!)
I'll say it a different way: VCs don't give a shit about the company _ever_ making a profit. They give a shit about ther VC making a profit. It's not the same thing at all! VC makes a profit if they invest at good valuations and sell at much higher valuations when the company goes public. The company doesn't have to be profitable! For all they care it will never be profitable! Pets dot com made some VCs a bunch of money!
(thx for kind words -good luck with your startup!)