apply-moonshot-technology-investing

Apply Moonshot Technology Investing

Accept a substantially higher individual-investment failure rate than standard venture investing when pursuing technically ambitious, breakthrough technology bets — in exchange for the possibility of a genuinely transformative, category-defining outcome that most investors wouldn't accept the underlying technical risk to pursue at all.

Why This Is Best Practice

Adopted by: Vinod Khosla, founder of Khosla Ventures, has built a documented investment career specifically around backing technically ambitious "moonshot" bets — particularly in clean energy and agricultural technology — with a publicly stated willingness to accept a much higher individual-investment failure rate than conventional venture investing typically tolerates, explicitly reasoning that the technology risk most investors avoid is precisely where the largest, least-competed-for opportunities exist. Impact: Khosla's publicly documented approach specifically argues that a portfolio explicitly built to tolerate an unusually high failure rate — accepting that many individual moonshot bets will fail outright due to genuine technical infeasibility — can still produce attractive overall returns if even a small number of the technically ambitious bets succeed at transformative scale, since breakthrough technology that succeeds tends to create disproportionately large, category-defining value precisely because fewer investors were willing to take on the technical risk required to fund it. Why best: Most venture capital avoids genuinely uncertain technical risk (whether a specific breakthrough technology will actually work at all, not just whether a proven technology will find a market) in favor of technology risk that's already been substantially de-risked — this leaves technically ambitious opportunities under-funded and under-competed for, specifically because most investors aren't willing to accept the higher failure rate genuine technical uncertainty requires, creating an opportunity for investors deliberately willing to accept that risk.