> VCs are not betting that the company will be asymptotically good, just good enough to make an exit.
This is a misunderstanding of VC investment. Any competent VC expects most of their investments to go to zero. They're hoping a small percent of their investments will make up for the losses. The goal of a decent VC isn't to avoid bad investments so much as it is to make sure they get one good investment. A good investment in AirBnB/Google/Facebook will make up for dozens of speculative bets that go to zero.
No, this is wrong. VCs regularly bet on companies they expect to fail, and occassionally even know will fail. They sometimes put money into companies knowing they will never get it back. They do not expect a positive return on every investment.
This is a misunderstanding of VC investment. Any competent VC expects most of their investments to go to zero. They're hoping a small percent of their investments will make up for the losses. The goal of a decent VC isn't to avoid bad investments so much as it is to make sure they get one good investment. A good investment in AirBnB/Google/Facebook will make up for dozens of speculative bets that go to zero.