It's not just having the dry powder -- it's knowing which companies are worth spending it on. You're either "defending your position" or "doubling down on a loss." Great way to lose money fast unless you can find some real signal in the noise of going from Seed to Series A.

And this is another brilliant part of Dave's model. He can rapidly apply lessons from the last 50-100 startups he funded to the next 50. He can rapidly collect metrics that will allow him to determine which companies are worth following on with.

His "sample size" is much bigger and therefore allows him to mine out statistically significant data about where to follow on.