A major challenge is that there are different tiers of investors and since most start onthe low tiers they have smaller funds (=more financing risk) and their LPs will have less patience and will want to see short term portfolio performance. The result is that VCs tend to hunt in packs and try to coat tail off larger investors who can afford to have a bolder vision because they can push their portfolio companies through even if the metrics are crap. Small markets while great in theory tend to carry too much risk for most VCs because they need to worry about the rest of the markets perception. We need to find ways to allow VCs to take more risk.
