Most portfolios are built around one big win. Ours isn't.
It has long been accepted wisdom in venture capital that one company will carry the fund. The logic is clean: back enough startups, and the mathematics of outliers will eventually work in your favor. One return covers the losses, justifies the fees, and validates the strategy.
This belief is so embedded in the industry that it has stopped being examined. It shapes fund sizes, portfolio construction, diligence standards, and the relationship between investor and founder. And for the most part, nobody questions it, because when it works, it works loudly.
What it looks like when it does not work is quieter, and more instructive.
The Volume Trap
Spray-and-pray is the natural consequence of scale. When a fund is deploying hundreds of millions, writing thirty or fifty checks is not recklessness. It is arithmetic. The individual company matters less than the aggregate bet on the distribution of outcomes.
The problem is what that arithmetic does to the work.
Diligence thins. Decisions become reactive. Portfolios fill with companies that were interesting enough to back but never deeply understood. Attention, which is finite, gets spread across too many situations to be genuinely useful anywhere. And founders, who needed a partner, end up with a shareholder who is quietly hoping they are the outlier.
That distance has costs. Some of them show up in the numbers eventually. Many of them never do, which is part of why the model persists.
Who Pays the Price
Founders feel it first. Capital arrives, but real engagement rarely follows. It becomes difficult to know where they stand with their investors, or what those investors actually believe about the business. In a portfolio built for volume, honest feedback is a scarce resource because honest feedback takes time, and time has been allocated elsewhere.
Co-investors inherit the same uncertainty. Without a lead who is genuinely close to the company, governance becomes loose and information flow becomes unreliable. Limited partners, who are ultimately funding the entire exercise, are left hoping the math holds up, because they have limited visibility into whether the underlying companies do.
The whole structure is held together by the expectation of an outlier that may or may not arrive.
High-Conviction Investing
Paligan was built on a different premise. We invest selectively, one deal at a time, with no pressure to deploy capital on a schedule or build a portfolio of a particular size.
That structure gives us the space to do the work properly. Deep diligence on business models, unit economics, and founder dynamics. Thoughtful structuring before a deal closes. Real engagement after it does. Every investment we back has to make sense on its own terms. We are not looking for one company to carry the rest.
This is not a modest ambition. It is a harder one. Saying no is more difficult than saying yes when capital is available and the opportunity looks reasonable. Going deep into a small number of situations requires more discipline than spreading across many.
The Case for Focus
High-conviction investing is not about doing less. It is about making each decision count.
That means asking harder questions before committing. It means being honest when something is not ready, even when it is tempting to proceed. It means showing up after the deal in ways that are genuinely useful rather than performatively attentive.
It also means accepting that the portfolio will be smaller, and that smaller is not a weakness in a model built around quality. A portfolio of ten companies that were each understood, structured carefully, and supported properly is a different proposition from a portfolio of forty where the math is doing most of the work.
We believe the former is better investing. We built Paligan around that belief.
