It's a hit business. One hit pays for everything. Venture Capital has changed a ton. Microsoft venture strategy is to make money but also boost up their own business. Different firms have different investment strategys.
Some firms invest in lots and hope for the big hit to pay for everything.
Ideal scenario and nightmare scenario. Scenarios highlight problems from above. Watershed has never invested in a company that came in cold. If you want to get funded, work through a network. Due diligience, review financial model.