The VC model encourages/forces founders to go for huge exits. You can't do a series A round and then sell the company for 10 million. Probably not even 20. The VCs won't let you. So they're more likely to get the giant outcomes that make up for the losses on the rest of their portfolio. Whereas there's nothing to prevent the founders of a startup we fund selling early for comparatively little.

Also, VCs have leverage working for them. They get a percentage of the returns on other people's money. We're using only our own.

Smaller principal x lower returns = less profit. Probably. But we're hoping to make enough that we can at least keep doing this.

Shooting in the dark, I'd say one big difference is the focus on the founders, rather than just throwing money in and hoping for something valuable to pop out. You can see that in the YC application--very different from a request for a business plan.