Where is the maximum expression? The idea that the power laws of venture capital returns are simply a subset of performance factors masks their fundamental role as a structural backdrop.
It is not just one factor among others, but the dominant parameter that dictates the optimal allocation strategy.
The quality of decision-making and the ROI ceiling are essential, but conditioned by the reality that a few investments will generate almost all returns.
Even a superior decision in a market without potential for extreme returns can never compete with an average investment in a high-potential power law market.
For example, exceptional exit opportunities via offshore RMB liquidity in Hong Kong allow these power laws to fully express themselves, which is much more critical than simple isolated decision factors.