The End of the Spray and Pray Era

The traditional venture capital model works like this. Invest in a hundred companies. Expect ninety to fail. Hope that five to ten return enough to cover all the losses and then some.

This is called spray and pray. And it has been the dominant model in venture capital for two decades.

The problem is that it optimizes for the wrong things. When your model depends on outlier returns, you push every portfolio company toward hyper growth. Even the ones that would be better off growing slowly and profitably.

The result is predictable. Ninety percent of VC backed companies fail. Not because they were bad businesses. Many of them could have been excellent small or mid sized companies. But they were pressured to grow faster than their fundamentals could support. They hired too fast. Spent too much. Expanded into markets they were not ready for. And when the growth did not materialize, they ran out of money.

The spray and pray era is ending because the math stopped working. When money was cheap and plentiful, VCs could afford to lose on ninety percent of their bets. Now that capital is more expensive, the tolerance for losses has dropped.

This is great news for founders who want to build real businesses.

The new model, the one we have been practicing all along, is more disciplined. Invest in fewer companies. Invest less money per company. Expect profitability, not just growth. Support companies with operational infrastructure, not just cash.

This model produces fewer headlines but better outcomes. More companies survive. More founders retain meaningful ownership. More businesses generate real wealth.

The spray and pray era served a purpose. It funded innovation and created some incredible companies. But it also destroyed a lot of value and burned out a lot of founders.

The next era will be about building businesses that work. Not just businesses that grow.