These are interesting data points; thanks for sharing. It makes me wonder then how board/investors/etc understand the companies, their technology and when to step in. There seemed to be less-informed-more-hype-associated investing for this situation). It then seems to becomes an economic game of understanding which companies in your portfolio to let die, to patch up with intention of selling soon, and to patch up with intention of getting the "train-back-on-track", all while managing perception of the business and any success or associated hype with downplayed failure (?).
It makes sense with pump and dump schemes, but less so, to me, for investments you need to hold on to for a long time.
I think about Warren Buffet's IBM investment. Anyone who talked to IBM engineers or perhaps read Robert Cringely's blog knew that IBM was facing a steep decline. However Warren Buffet applied the lens of finance to IBM's stock and it looked like a good deal. It wasn't.
Probably what is happening is that VCs/tech investors in general have had success in one area and then take it as a positive reinforcement of their own skills. Sometimes the investor is looking at other signals, which worked for them in another project. In this case, there was probably total ignorance of physics combined with the unwillingness to just ask some basic questions from people with knowledge in the area.
Perhaps the lesson for everyone is the VCs who did really well in the past decade or two -- if they fail to learn about the areas they are investing in -- may not be capable of distinguishing the next wave of great companies from intellectual fraud.
