Roger Federer played more than 1,500 singles matches in his career, won just 54% of the points, but he still managed to win 80% of those matches.
It’s a powerful reminder that you don’t need to win all the time—you just need to win big when it counts.
This is the same idea that underpins the Power Law in venture capital. A small number of investments typically generate the majority of returns. Which is why many VC firms cast a wide net—investing in dozens of startups in the hope that a few will deliver outsized returns.
But here’s the thing: the Power Law doesn’t always work the way it’s supposed to.
The downturn in global venture capital markets over the past couple of years served as a wake-up call. Relying solely on the Power Law isn’t enough. As risk capital flows back into startups, it may be time to reconsider how this principle should be applied.
At Lightbox, our interpretation of the Power Law has always been different—and that’s helped us navigate market cycles with greater stability. We sat down with Lightbox founder Sandeep Murthy to explore what that really means.
“VC is a high-risk, high-return game. That’s what we’re playing for,” says Murthy.
Before we even get into the Power Laws it’s worth reminding ourselves what venture capital is. Unlike private equity or public markets, VC is not about incremental growth. It’s about taking bold bets and backing ambitious founders.
And yet, the reality is sobering: over a 10-year period, most venture funds return just 1.1x–1.3x. Around half don’t even return investor capital. But stretch that timeline to 25 years, and venture as an asset class starts to outperform private equity.
That long-term horizon is where the Power Law kicks in. A few big wins can offset many losses.
But… “In the long run, we’re all dead,” Sandeep reminds us.
In Silicon Valley, the traditional VC model is about betting on breakthrough technologies—search engines, semiconductors, biotech, AI. The market is already structured and urbanized. So you place lots of bets, hoping one breakthrough changes everything.
It’s what’s often called the “spray and pray” approach.
India, on the other hand, is a different story.
“We’re not building new mousetraps. We’re organizing the unorganized,” says Murthy
Here, the opportunity isn’t about reinventing the wheel. It’s about applying proven technology to inefficient, fragmented markets—retail, logistics, food, healthcare, and more.
That’s why the Power Law looks different in India. The risk is execution.
A study by Stepstone and Primary Capital looked at what separates “good” VC funds from “great” ones. Both types lose roughly 50% of their investments. The difference? Great funds put a higher percentage of capital into their winners—around 35–40%, versus just 18% for the rest.
This is what Lightbox focuses on: backing fewer companies, but with greater conviction.
“We’re not chasing dozens of ideas. We’re identifying companies that can deliver 7–8x, and concentrating our capital and support around them.”
Take Rebel Foods, Furlenco, and Bombay Shirt Company. These aren’t radical new tech ventures. They’re well-understood businesses being reimagined for scale and efficiency.
It’s not about inventing. It’s about executing better.
Most founders don’t fail because the idea is bad. They fail because execution is hard.
That’s why Lightbox has built an internal portfolio operations team, led by experienced operators like Ashish Bhargava (ex-Marico, ex-private equity). Their job? Help founders solve real-world challenges—from hiring and supply chains to pricing and profitability.
“We’re not funding two people in a garage with a dream. We’re backing businesses that need to operate across value chains—and we help them do that better.”
The results speak for themselves: Nua reached profitability and is now growing sustainably. Cityflo found a scalable model across B2C, B2B, and even public sector contracts.
The second pillar of the Lightbox approach is corporate governance. For startups, this often feels like a distraction. But it’s foundational.
Lightbox offers a flexible governance framework based on company stage (Series A, B, C). That way, businesses are set up for success—not just in operations, but in fundraising, M&A, or IPO readiness.
“Raising capital isn’t the goal. Building a valuable, profitable business is.”
If you’re a founder rethinking how to scale in a post-downturn world—or an investor curious about new VC models—let’s talk. The Power Law still matters. But how you apply it makes all the difference.
