n my previous post, I unpacked the Ecosystem Approach to Venture Investing and its many advantages. By contrast, the traditional venture capital (VC) model often leans on the power law approach — where a fund’s performance is largely driven by one or two breakout wins. This strategy can deliver spectacular returns for a select few funds… but for many others, it often means thin spreads and higher failure rates.

The power law method, sometimes nicknamed “spray and pray,” isn’t pure chance — rigorous due diligence underpins every bet. Yet, its inherent concentration creates blind spots and risks.

So, what if instead of choosing between power law and ecosystem strategies, we integrated their strengths? A hybrid model could boost upside potential while creating a more resilient, collaborative, and sustainable venture landscape.

Here are three key limitations of the power law approach and how an ecosystem lens can help address them:

1. Selective Focus → Broader Portfolio Support

Drawback: Power law strategies often prioritize a handful of startups, leaving others under-supported.
Ecosystem remedy: While channeling energy into high-potential ventures, collaborate with incubators, accelerators, and other entrepreneur support networks to create a safety net for less successful startups.
Benefits:

• Losses are cushioned, even when returns on specific portfolios are modest.

• The ripple effects of failure on communities and founders are minimized.

2. Limited Impact → Shared Value Creation

Drawback: Returns tend to accrue narrowly to the winners, with minimal lasting impact on the broader ecosystem.
Ecosystem remedy: Engage in collective activities like policy advocacy, knowledge sharing, and building shared infrastructure.
Benefits:

• Creates enduring value that supports not just a few, but many ventures.

• Expands the overall market and customer base organically.

3. Winner-Takes-All Mentality → Collaborative Growth

Drawback: Power law dynamics can fuel zero-sum competition, fragmenting communities and limiting collaboration.
Ecosystem remedy: Encourage partnerships among portfolio companies and beyond, and support long-tail startups that sustain the broader system.
Benefits:

• Reduces concentration of success in a small cluster.

• Strengthens the ecosystem’s resilience and collective capacity.

By blending the precision of power law investing with the depth of ecosystem thinking, we can unlock new opportunities: faster scaling, diversified exit pathways, stronger communities, and lower systemic risk.

This isn’t about replacing one model with another — it’s about building a more balanced venture architecture for long-term value creation.