If only 10 out of 100 of your investments make it, does it matter if one of the 90 failed because of lacking backups? Their risk strategy is diversification of investments. Not making each investment itself bulletproof.

Yes, it is in effect a gamble. The issue is that this strategy doesn't really prove profitable for the majority of VCs. Less than 30% of VCs get to a unicorn or IPO deal. 46% of VCs don't profit at all. This is as per the recent post "(Only) half of senior VCs make at least one successful deal.". I am even ignoring the ones who drop out and don't contribute to the active statistics.

The strategy is about as silly as having ten babies and expecting that one of them will make it. It is what you would expect out of the worst poverty-ridden parts of Africa.

An alternative is to select and nurture your investments really well, so the rate of success is much higher. I'd like to see the script be flipped, whereby 90% of investments go on to becoming profit making, secondarily with their stable cash income being preferred to big exits.