This is always the case. Even Sequoia has made blunders before - turning down Salesforce and investing in Webvan, to name a few.
1 - Investing in the wrong company
2 - Missing the right company
The first bucket has limited financial downside. (You only lose what you invested) The real cost is time and attention. (An investor can only sit on a fixed amount of boards)
The second can be a lot more painful, because the upside can be 10-100x. Missing out on Salesforce (or Yelp, or pick your winner) can be even tougher.