The most important companies are those that others don’t see as valuable.
Peter Thiel
The statistics for startup success are well known. About 90% of startups will fail within three years of starting. Within the group of startups that succeeds, the returns for venture investors are concentrated in few companies. Assuming an investor is able to see one of these potential outlier companies in time, there’s always a question of whether they are able to spot the opportunity and pursue an investment.
When we look at some of the most successful startups—think Airbnb, Uber, or even Zoom—they were, at one time, non-consensus investments. These companies didn’t seem like clear winners to most, yet they redefined their industries. In this post, we’ll dive into the differences between consensus and non-consensus investments, how they map onto a quadrant, and why non-consensus investments tend to yield the highest returns.
Understanding the Investment Quadrant
Let’s visualise the investment landscape through a quadrant that maps consensus and conviction:
Consensus vs. Non-Consensus: Understanding the Dynamics
“The big money is in the space where things don’t look good to others.”
Bill Gurley, Benchmark
Let’s start with the basic definitions:
- A consensus investment is one where the majority of investors are aligned in their belief in the company’s potential. This often occurs in hot sectors or with startups that have demonstrated strong early traction.
- Non-consensus investments, on the other hand, are those that defy popular opinion or seem risky due to unconventional business models, unproven markets, or early market entry.
Key Characteristics of Non-Consensus Investments
- Radical Differentiation: Solving problems in ways no one else perceives
- Technological Leap: Introducing paradigm-shifting innovations
- Counterintuitive Approach: Challenging existing market assumptions
At Remagine Ventures, we’re two GPs and a venture partner in the investment committee. But even within our lean team we don’t require consensus to make investments. That being said, in situations where we have a disagreement on pursuing an investment we established a way to address the concerns. Basically, that means doing more research and getting comfortable with the risk. Typically one of the GPs who is more excited about a deal leads, and the other one plays adversary (to an extent) pushing back. This leads to the ability to do non-consensus deals, but puts the burden on the ‘lead’ and ultimately the discretion.
The Power of Non-Consensus Thinking
Data consistently shows that the most lucrative venture returns come from high-conviction bets that initially faced widespread skepticism. Cambridge Associates‘ research reveals a compelling pattern: the investments that generated the most exceptional returns were often those that struggled to attract initial investor interest.
This finding becomes particularly relevant in today’s competitive venture landscape. When too many investors pile into ‘obvious’ opportunities, valuations inflate and returns compress. The real magic happens when a VC firm develops deep conviction about an opportunity that others dismiss or overlook.
This creates an interesting paradox: the safest-seeming investments (those with broad consensus) often produce mediocre returns, while the seemingly riskier non-consensus bets, when backed by thorough analysis and strong conviction, can deliver extraordinary outcomes.
As Mike Maples Jr., puts it in his book ‘Pattern Breakers’, the most successful investments aren’t about incrementally improving existing solutions, but about reimagining entire systems of value creation.
Cambridge Associates found that top-quartile VC funds consistently featured a higher proportion of these contrarian bets in their portfolios. This makes intuitive sense – by the time an investment thesis becomes consensus, the opportunity for outsized returns has often already eroded due to intense competition and elevated entry prices.
Another groundbreaking study by Correlation Ventures provides compelling evidence for the non-consensus approach. Their analysis revealed that:
- Non-consensus investments generate 3-5x higher returns compared to consensus deals
- Approximately 40% of top-performing venture investments were initially considered “contrarian” or “unlikely to succeed”
Risk Mitigation Strategies
The best investments are not obvious when we make them.
Fred Wilson
While non-consensus investments have high potential, they are not a guaranteed recipe for success. High-conviction, consensus investments can anchor a portfolio, providing steadier returns. Meanwhile, well-researched, high-conviction non-consensus investments offer the chance to capture outsized returns if they succeed. Together, this mix of investments creates a diversified and balanced approach, which is essential for long-term success.
Successful non-consensus investments require:
- Deep domain expertise
- Rigorous due diligence
- Understanding fundamental technological or market shifts
- A framework for evaluating potential breakthrough technologies
As I’ve recently heard in a podcast, the most successful VCs cultivate what we might call “intelligent contrarianism” – the ability to distinguish between genuinely innovative ideas and merely strange concepts.
How we approach Non-Consensus at Remagine Ventures
Remagine Ventures has always believed in the power of going against the grain when the opportunity feels right. In fund one, our strategic backers from the worlds of media and entertainment always instilled in us the interest to find technologies to scale and automate content creation, distribution and monetisation. That led us to start investing in generative AI in 2019 (consider that ChatGPT only came out in November 2022, that’s pretty early). Our first investment in this space was Hour One, the AI avatar text to video company. At the time, everyone was concerned about Deepfakes, and we led the company’s first round by ourselves. Later one, the space exploded, Hour One raised their seed from Galaxy and Kindred and their series A from Insight Partners. Today, AI avatars represent a big market opportunity and AI video is in the Zeitgeist.
In sectors like consumer tech, gener AI, we actively seeks out ideas that might not be mainstream today but could be foundational tomorrow. It’s a strategy that requires patience, conviction, and a willingness to see value where others may see risk. As someone put it on X (formerly twitter), ‘if VCs are talking about it in every other LinkedIn post, it’s too late’.
So, shameless plug, if you’re a founder building what many would consider a contrarian company, please don’t hesitate to reach out. At a minimum, we’ll give you quick, constructive feedback and if the stars aligned, we’ll continue to support you in riskiest stages of your company building.
I'm a former general partner at google ventures, head of Google for Entrepreneurs in Europe and founding head of Campus London, Google's first physical hub for startups.
I'm also the founder of Techbikers, a non-profit bringing together the startup ecosystem on cycling challenges in support of Room to Read. Since inception in 2012 we've built 11 schools and 50 libraries in the developing world.
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