As someone in the hard tech space I can tell you that it's not completely irrational on their part. When you look at exits and probabilities of exits, the types of software companies you describe make up the bulk.
The biggest (by val) technology startups that we know of (Uber, Lyft, AirBnB, Snapchat, Dropbox, Pinterest) are by no means hard tech. Even the public ones aren't hard tech (Facebook, Linkedin, Twitter). So that's what these investors look to as the types of investments that make sense for them.
The question is, do hard tech companies have similar probabilities of outcomes or bigger?
The biggest (by val) technology startups that we know of (Uber, Lyft, AirBnB, Snapchat, Dropbox, Pinterest) are by no means hard tech. Even the public ones aren't hard tech (Facebook, Linkedin, Twitter). So that's what these investors look to as the types of investments that make sense for them.
The question is, do hard tech companies have similar probabilities of outcomes or bigger?