One number matters more than you think: N, the number of startups you hold. In power‑law markets like pre‑seed/seed, return is a function of whether you include the rare outliers. If you want the market’s IRR, you need a portfolio big enough to reliably catch those outliers. The mistake most seed funds make isn’t price or pick—it’s N.
What “indexing” means in venture (vs. public markets)
In public equities, covered in this WSJ article, indexing means you buy a cap‑weighted basket and harvest the market’s return. In venture, you can’t mechanically buy “the market,” but you can approximate beta by holding a large, stage‑consistent sample of deals and avoiding concentration risk. Practically, that looks like 50–150 initial positions per fund at seed (or exposure to hundreds via a platform/FoF), not 15–30. The goal isn’t to out‑select; it’s to out‑include. Institutional Investor
The base rates that drive portfolio design
Power‑law outcomes at the deal level
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