Permissionless Meritocracy in the Age of Venture Capital Gatekeeping
Venture capital (VC) resides at the center of twenty-first century commerce. A titan in this moment of innovation, it boasts considerable powers, wielding them with a force that can as easily topple an industry as birth its successor. Predictably, VC has garnered its fair share of scrutiny, a fact no doubt explained by the rise of its influence.
But a slightly different critique takes aim at the industry’s anti-permissionless foundations, those reflecting a tightly-sealed network of insiders: a sort of permissioned insiderness among LPs, GPs and founders, if you will. But no matter the framing, the aforesaid reveals a stark juxtaposition to the decentralized, permissionless systems the industry routinely underwrites — a contrast so keen that it apparently fails to register as unusual. Nevertheless, selection into this lot turns not on talent per se, but on a strained, artificial reading of eliteness.
It’s strained for it borrows not from a broad examination of the many faces of genius, but from the regressive belief that talent, apportioned among many, invariably resembles the pattern I know: the pattern of me. It’s no doubt an unserious claim, but as it has scaled, it has segued into a sort of institutional dyslexia that has jammed the levers of innovation. Indeed, for it mistakes the truth that “talent can look like me” for the fiction that “therefore it must.” It’s as profoundly anti-founder as it seems, for it legitimates quack, founder essentialist blueprints that assign founders to two lanes: those with an insider e-z pass, and those without it. And finally, it’s empirically anti-LP, for how else to describe something that so demonstrably harms returns?
And yet, there’s a sliver of hope worth noting: this version of VC is a choice—entirely a structural choice. For it’s not the result of some preordained, institutional inevitability, nor the outgrowth of a fated scenario impervious to revision. Rather, it’s a system relying not on a natural law, but on a kind of nimbyism for the innovation economy: a doctrine that instead of gatekeeping mediocrity is actually gatekeeping returns. And yet, all of this suggests that VC, under the right conditions, can become something else, something better, something more.
Still, ousting this institutional rot will not be easy, for its psychological wages are immense. And yet, the task is doable, with the most stubborn among us having the best chance to prevail. But before they do, I offer but one suggestion: weave more permissionless-funding structures into the fabric of VC, structures embodying the ethos of a permissionless meritocracy, those rejecting the myopic avatars of genius against which many founders are unfairly benchmarked.
That some will suggest that a purely permissionless VC model is practically unattainable is at once correct but notably not the point. Instead, the aim, or at least in part, is to make the fundraising process more likely to serve those it has failed. Indeed, our systems, fallible as they are, should fuel innovation, not suppress it—spot talent, not typecast it. By that very test we are failing, for founders should no more have to appear in a certain package to be considered fundable than money should have to appear in a certain wallet to be considered valuable. The grip that artificial eliteness has on our innovation ecosystem needs to end, for anything less fails to put founders, and LPs, first.
