Well, I hear what you're saying, but I think more often than not people are simplifying it. The way VCs operate is really a consequence of liquid financial markets. If I have a large amount of capital, I can invest it into treasuries and get a small return at zero risk (zero in a sense that if the U.S. government defaults the entire world economy will go to hell anyway). So, it just doesn't make any sense for people to invest into high risk low return businesses, and lifestyle startups tend to fall into this category. It seems that the decision has been made implicitly by the way modern financial markets are structured, and hasn't really been made by the VCs themselves.
This is why I'm a bit skeptical of the "new breed" VCs that have a different business model (invest less money into companies that potentially target smaller markets). It just doesn't make any sense from the financial perspective.
This is why I'm a bit skeptical of the "new breed" VCs that have a different business model (invest less money into companies that potentially target smaller markets). It just doesn't make any sense from the financial perspective.