"Where marginal stupidity is about “how there is a turning point where further information or complexity can befuddle us and simply raise costs without any concomitant value,” what I am seeing in hard science investing is an outsourcing of thought, a reliance on the splashy marketing one-pager instead of the agonizingly long technical research with the diligence to match.

None of this bodes well for many of the new VC entrants who have suddenly become enamored by the capital return potential of science. We have a view that real advances in science are relatively rare, that they are hard to produce, and they tend to be signaled by clear research evidence years if not decades in advance. Venture capital is not a fit for the needs of academic researchers who require long time horizons of open exploration without commercial considerations. Skillful diligence is critical to making thoughtful investments, and investors must have a well of resilience to draw upon, since most diligence will come back relatively negative in the hard sciences compared to software.

We need the right dose of vaporware skepticism. We can’t allow the excitement of science fiction to occlude the challenges of realizing it into science fact. Condensing fact from the vapor of nuance means finding the rare but tangible scientific advancements and propelling them forward on the path to commercialization. Otherwise, you’re investing in steam, and those returns on capital will just evaporate right through your fingers." - Danny Crichton

Lux Capital's "Securities" newsletter edition: Vaporware skepticism by Danny Crichton

"Securities" podcast is produced and edited by Chris Gates

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