If you need to have the possibility of near infinite returns on VC investments how is it possible to invest in higher risk things and expect a return?

VC portfolios are already constructed so that any company they invest in needs to have a chance of a near-infinite valuation in order to pay for all the failure. Software companies have incredible margins because they have low capital costs and often have known sales channels and little true technology risk. If there are enough software companies that have a potentially massive valuation (which seems to be a not-slowing-down trend in 2020), wouldn’t investing in non-software companies be irrational because it’s just increasing risk without increasing potential reward?

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