I've heard the same happen to friends attempting to seek investment in 'music' and 'gaming' businesses - clear rejections based upon their 'category'.
To be fair, I guess making huge returns is not their prime policy or maybe their investors have a policy against certain investments due to moral or some esoteric reasons.
You cite esoterica, but perhaps investors just feel more comfortable with certain areas - or ones they have the in-house experience to evaluate properly - or that are easier for junior partners to sell to the folks higher-up?
I'd understand if this was Ontario Teachers Pension Fund or something like that where a large amount of capital had to move around to generate some sizable returns. Even these money managers are scrutinized for bad decisions.
The whole 'not our area of focus' seems to be the same line mutual fund managers use during report card season by writing off bad picks and claiming they beat the market.
This advice comes straight from the oracle of Omaha himself, "Never invest in a business you can't understand."
Having said that, there's perhaps something to be said for picking one's battles?
Indiscriminately attempting to capitalise on any lucrative opportunity seems like a common road to ruin (feature creep, startups that put everything in scope, https://xkcd.com/793/).
For example, make 1% stake bets stretched across 100 startups vs 20% stake bets stretched across only 5 startups I "understand" or feel comfortable with. Isn't the risk inherently bigger if you chose the latter? If one of those 100 startups end up producing low to mid 5 digit ROI, shouldn't that cover for the 99 other bad bets? The probability increases since you are not introducing any personal biases and exposed to more upside potentials.