When I first started investing in 2007, I heard some investors turn down opportunities because of “scar tissue.” They had previous brutal (and usually money-losing) experiences with an idea/sector/market and this prevented them from doing it again. The canonical example for us is Ron Conway and music. Ron spent the better part of a decade “dealing with” the music industry with Napster and Snocap. After that experience, he didn’t make a music-related investment for awhile.
I started relatively late in my career as a start-up investor. There are obviously some disadvantages to being a late-starter. But one advantage is that you don’t have any scar tissue built up. You have a beginner’s mind. (The same can obviously be said for ‘first-timers’ - they can ask 'Why not?’ without feeling self-conscious). Scar tissue is like any other cognitive bias - it shades your judgment subconsciously unless you’re nudged to think differently.
But after investing in and working with hundreds of startups, I can feel the scar tissue build. It’s hard to avoid. We sometimes tell prospective founders that we won’t invest we have too much “scar tissue” in this area. This is admittedly a wuss answer at times. It can also be foolish because maybe the reason why an idea didn’t work previously was because of timing. “Being early” is the same thing as “being wrong” - even a broken clock is right twice a day. But if you confuse the two concepts, sometimes it creates scar tissue that can blind you to a big opportunity.