Venture capital firms often pass on investing in successful startups with solid prospects. Why is that? It's because VC firms have investors they must satisfy

Listen to Jason Lemkin explain the return on investment expectations that investors in VC funds have, and how that determines which startups any VC will invest in. The expectations are so high, that VCs are interested only in funding unicorns — companies founded by people with "crazy insane ideas," because those startups have a shot of achieving outsized returns.

“Crazy, Insane Entrepreneurs”

Let’s break it up, what is a success? From a venture perspective, VCs can only make money out of unicorns. So VCs only care about folks that are at least trying, at least are giving it a shot to build something worth billions. That is hard, I didn’t do it, right I had nine and eight- figure exits, I didn’t have any big dollar unicorn exit myself, it’s hard.

But if you are a VC, even a modestly sized fund, $150 million fund, a $150 million fund means you have to return $450 million back to your own investors. You can only do that with unicorns, right. so for a VC you want a founder who are simply plane sane and crazy. Because most founders as soon as they get – you know, we used to use this term (FU-money), let’s call it a lot of money. Most founders who are san normal people, living normal lives, they will sell.

As a founder myself then more power to you, right. So if your 500 startups or an angle or doing super early stuff there is a broader definition, but for bigger VCs you have to invest in crazy insane people, with crazy insane ideas to like turn empty rooms into like a house that disrupts the Hotel industry. I mean it sounded crazy but Airbnb’s done okay, right you have to invest in crazy.