Venture Capital unfiltered: The good, the bad & the herd mentality

Venture Capital unfiltered: The good, the bad & the herd mentality - Tenity Insights from Davos 2025

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What really makes a great investor?

Venture capital is often seen as a high-stakes game of big wins, bigger risks, and billion-dollar exits.

But what if the biggest risk isn’t in the startups—but in the investors themselves? At the World Economic Forum in Davos 2025, Maximilian Plan K, Venture Partner at Tenity, hosted Ornit Shinar, Partner at RAIN, on Innovation Connected for an unfiltered discussion on what’s broken in venture capital today.

They covered why some investors keep funding failing startups, how herd mentality leads to bad investments, and what contrarian VCs do differently.

Here’s what you need to know about the good, the bad, and the herd mentality in venture capital.

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What makes a good investor?

Many entrepreneurs assume that more funding means better opportunities. But Ornit Shinar makes it clear that smart money is not the same as big money:

“A good investor is an investor that gives you enough money to get to the next milestone you need to get to—and that helps you when you want it but doesn’t micromanage you.”

This is a critical lesson for both investors and founders. Startups that receive too much money too soon often burn through cash without focus. On the other hand, if funding is too little, they may never reach their next milestone. If you’re searching for top venture capital strategies, remember that great investors don’t just provide money—they provide timing, structure, and value.

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The #1 problem in Venture Capital: Herd mentality

One of the biggest issues in VC? The herd mentality. Instead of making bold, independent decisions, many investors simply follow the crowd—even when it leads to bad investments.

“There’s a terrible herd mentality in the VC community. We feel that it’s much better to do a bad investment if we did it with other people because we feel less stupid if there were others with us.”

This fear of being wrong alone leads to overhyped investments in trending sectors—like crypto, AI, and climate tech. While these industries have massive potential, history shows that many investors jump in at peak valuations, leading to huge losses when the hype dies down. If you’re researching mistakes to avoid in venture capital, remember: Blindly following trends leads to inflated valuations, poor exits, and major regrets. The best investors think independently and bet against the crowd when necessary.

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Why investors keep throwing good money after bad

Another critical mistake in venture capital? Not knowing when to cut losses.

“Most of us, if we’re honest, will miss a lot of very exciting opportunities. But also, sometimes we keep putting good money after bad in things that really should not continue.”

Why does this happen?

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Ego: Investors don’t want to admit they were wrong.
Fear of failure: No one wants to write off a major loss.
Sunk cost fallacy: If they’ve already invested heavily, they feel obligated to keep going.

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Great investors understand when to walk away. They fail fast, learn fast, and move on to stronger opportunities. If you’re searching for how to make smarter venture capital investments, know this: Data-driven decision-making is key. Investors who cut losses early have higher success rates than those who keep funding bad bets.

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The Startup ecosystem myth: Why it’s about more than just funding

Startups don’t thrive in isolation. They need a fully connected ecosystem—not just funding.

“If you involve your clients from the get-go, you can understand very early if what you’re looking at is something that actually interests them.”

The best startup ecosystems—like Silicon Valley, London, and Tel Aviv—aren’t just full of investors. They’re networks where startups, corporates, and VCs collaborate to fuel real innovation. If you’re looking for top startup ecosystems in 2025, the best ones go beyond just funding. They connect startups to real customers and corporate partners early on, making sure ideas aren’t just exciting—they’re viable.

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The investment trends emerging from Davos

So, what’s next for venture capital? Two major trends dominated Davos this year:

1️AI & Automation – AI-powered industries are reshaping fintech, healthcare, and security.
2️Defense Tech & Security – What was once a taboo sector for VCs is now one of the hottest spaces for investment.

“Defense Tech has become legit. It used to be a swear word—no VC would touch it. But that’s not the case anymore.”

This shift shows that economic and geopolitical changes are driving new VC priorities. If you’re searching for emerging VC trends in 2025, focus on AI, defense tech, and security startups—industries that are booming despite economic uncertainties.

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Final takeaways: What every founder & investor needs to know

This conversation between Max and Ornit reveals the real challenges and opportunities in venture capital today.

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For investors:

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- Stop following the crowd—think independently.
- Know when to cut losses and pivot to better opportunities.
- Invest in full startup ecosystems, not just individual companies.

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For founders:

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- Choose investors who provide strategic value, not just cash.
- Get real customer validation early—not just polite feedback.
- Build your startup in an ecosystem that gives long-term support.

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For more insights into fintech investment trends, corporate venture capital, and startup growth strategies, subscribe to Innovation. Connected – World Economic Forum Davos 2025 Edition.

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