Venture capital is a private asset class that has a greater global supply of dollars than great startups where those dollars can be put to good use. The private and globally oversupplied nature of venture capital (there are pockets of undersupply in some emerging markets like Turkey) makes seeing and getting into deals as important determinants of success as the exercise of sound judgment when evaluating companies.
And seeing and getting into deals is not only a function of the success of the companies you invested in in the past, but also your reputation in how you dealt with these companies.
Your reputation, in turn, is at greater risk when things go wrong than when things go well. The reason is that, in the former, there’s more to correct, including that which often requires stepping on some people’s toes, as well as more blame to go around.
That’s why I really like this quote from Andreessen Horowitz’s Marc Andreessen:
“We make our money on the [startups] that work and we make our reputation on the ones that don’t.”