Listen to this article18 minIf you want a rough sketch of where humanity is heading, you no longer start with philosophers or policymakers. You start with a cap table. The tools that shape our attention, the infrastructure that runs our economies, the models that guide how we work and relate to each other are, in practice, selected by a small cluster of funds and investment committees. They decide which teams get oxygen and which ideas stay as beautifully crafted pitch decks in forgotten folders. That power was always there in the background. Over the last decade it became explicit.Venture capital likes to tell a story about itself. In that story it is the weird cousin of finance. The part of the system that willingly walks into uncertainty, backs non-obvious founders, funds experiments that would never make it past a bank credit committee, and accepts a high miss rate in exchange for a few world-changing outliers. It is risk capital for ambitious people. Everyone else is there to manage what already exists.If you spend time listening to founders, emerging managers and even sober limited partners, a different picture comes through. The complaints are not about the existence of risk or about the inevitability of failure. They cluster around the same failure modes, which we also examine in our analysis of new retail gatekeepers in private markets. Pattern recognition hardening into pedigree worship. "Pre-seed" capital that behaves like late-stage money in disguise. Processes that extract information and time while avoiding clear answers. Term sheets that misalign incentives for a decade. Fund structures that reward fee generation and asset gathering more reliably than realised results. None of this looks like an industry that is comfortable with genuine risk.The problem is not just hypocrisy. The problem is that this misalignment quietly shapes which futures get built. When you filter the next century of tools and infrastructure through a system that fears discomfort more than it fears stagnation, you do not just get a few bad board meetings. You get a world that looks flatter, more fragile and more derivative than it needed to be.And this is where IPO Genie comes in. Not only to select the winners before anyone else sees them, but also to select the winners that the entire VC industry shirks away from, because the project doesn't fit the mould. Out-of-scope, they'd say.
The Myth and the MachineOn paper the brief is still elegant. Pool capital from institutions that cannot build companies. Give it to people who want to try things that are too early, too strange or too uncertain for traditional finance. Accept that most attempts will fail and that the payoff sits in a small set of power law winners.In practice the machine evolved into something messier, and ironically, less profitable.Funds are raised in tight institutional circles, often based on brand, social proof and paper marks from previous vintages. Sourcing leans on a handful of accelerators, a small set of universities and a short list of employers. The same five postcodes appear in founder bios.Warm introductions act as an informal gating mechanism.From the allocator's side this can be rationalised. If talent and information are clustered, building funnels around those clusters feels efficient. From the founder's side it feels like a wall. If you are not already inside the right networks, your odds of being treated as "venture quality" drop before anyone has engaged with your work. Doesn't matter how solid you are as a founder, and how revolutionary your project is. A system that was meant to discover non-obvious opportunities begins to behave like an expensive indexing strategy on a small set of pedigreed pipelines. A highly ineffective, and hence, unprofitable strategy.The uncomfortable implication is simple. An industry that markets itself as a discovery engine spends much of its time crowding into the same safe deals. The real discovery work is pushed onto angels, operator syndicates, local ecosystems and bootstrappers. Venture capital then arrives later, once the strange thing has proven itself enough to look familiar.
Pattern Recognition That Turned Into Pattern BlindnessThere is nothing inherently wrong with patterns. If you have seen thousands of companies, you should have some intuition about what functioning go-to-market looks like, how strong teams behave under pressure and which markets are more forgiving. The critique is not that pattern recognition exists. It is that the patterns being enforced have drifted toward brand and geography while ignoring where new opportunity tends to appear.Founders outside the canonical hubs repeat almost identical stories. Cold emails get the silent treatment. Application forms to "open" programs never produce a human reply. The few meetings they secure quickly pivot from the problem to the postcode. The question becomes why they are not in San Francisco rather than whether the thing they are building might matter. When someone finally wires money, it is often an emerging manager who made a deliberate choice to look in places others ignore.Inside large funds this is reported up the chain as "weak deal flow from region X" or "no compelling founders in sector Y". On the ground it feels like refusal to update mental models. The conclusion is baked in before the conversation starts. If a founder does not look like the last success story, the idea is not allowed to be evaluated on its own terms.Over time this turns into a quiet but profound form of pattern blindness. The more capital crowds into familiar signals, the more the system misreads what is happening at the edges. The founders solving hard problems in unglamorous industries, or in countries that do not appear on conference slides, either never start or are forced into funding paths that do not benefit from the support structure venture pretends to provide.
Risk Capital That Learned to Hate RiskThe next distortion shows up at the level of stage and expectation. Visit websites or listen to conference panels and you still hear about "day zero", "first cheque", "backing people before the metrics are there". Talk privately to founders and you hear a different standard.Funds calling themselves pre-seed expect live products, meaningful traction and sometimes even hundreds of thousands in annual recurring revenue. Seed investors want the company to look like a polished Series A from a few years ago, with stable cohorts, ironed-out unit economics and a clear path to scaling. Series A has drifted toward what used to be called growth. Labels remain anchored in the old narrative while the underlying risk appetite migrates upward.Wrapped around this stage inflation there is an informal requirement list that borders on parody. Founders are expected to be fully committed before any financing exists, yet somehow already de risked enough that failure would look irresponsible. They are told to attack huge markets while maintaining a narrow initial focus. They must be capital efficient but invest aggressively in growth. They have to be disruptive enough to sound exciting, but not so disruptive that investors worry about regulators or incumbents.None of these demands sound absurd in isolation. Together they form an impossible constraint set. The predictable outcome is obvious. Founders feel pressure to present cleaner narratives than reality supports and to hide the parts of the journey that do not photograph well. At the same time, genuinely weird or frontier ideas die in the sandbox phase because no one wants to see them until the hard uncertainties have already been resolved by someone else.In theory, venture capital exists precisely to underwrite those messy, pre-consensus phases. In practice, a lot of funds only step in once angels, customers and employees have already done the heavy lifting. They still claim the vocabulary of risk while optimising for adverse selection. The most interesting technological and social experiments either happen outside the venture model, or are retroactively claimed by it once success is undeniable.
Process Cruelty and the Slow Death of TrustCapital markets are not meant to be comfortable. That is part of the job. There is a difference between discomfort and unnecessary risk.Founders repeatedly describe processes that consume extraordinary amounts of time and emotional energy without producing clear outcomes. Multiple calls, deep data requests, diligence exercises that soak up weeks of team attention, all wrapped in language about "moving quickly" and "strong interest". Then silence. Not a hard no. Not even a soft one. Just an inbox that never receives another reply.From inside a fund this kind of behaviour can be framed as overload. Everyone is busy. No one intends harm. From the founder's side it looks different. Every week of ambiguity is a week in which hiring decisions are frozen, product focus is blurred and limited runway is burned on narrative management rather than customers. When this pattern repeats across dozens of investors, it does not feel like bad luck. It feels like a culture.Alongside ghosting sit the stories founders are most reluctant to tell in public. A partner who enthusiastically encouraged more sharing, then quietly led a round into a direct competitor with an almost identical pitch. A firm that used detailed operational data from one company to benchmark and favour another. Term sheets that bundle multiple liquidation preferences, ratchets and broad control rights into structures that drain most of the value from plausible exits, signed by teams who did not have the legal fluency to understand the long term consequences.Any single example can be dismissed as an anecdote. In aggregate they change behaviour. Founders become more guarded in conversations. They avoid sharing hard-won insights. Some stay away from institutional capital altogether, even when it might help. Trust, which is the actual lubricant of long term collaboration, erodes. The industry answers with brand campaigns about "founder friendliness", then repeats the same habits once the cycle turns.
Structures, Power Laws and Distorted IncentivesUnderneath the sourcing habits and process norms is a more basic design question. Who gets paid for what.The dominant pattern is still the closed-end fund with a nominal ten year life, two percent annual management fee on committed capital and a slice of eventual profits. In principle this ties general partner economics to limited partner outcomes. In practice the picture is much noisier. Many funds struggle to return capital net of fees. Some only just clear that bar. A much smaller subset generates the sort of outperformance that justified the entire asset class in earlier decades.Despite this distribution, new funds continue to be raised on the strength of paper marks, narratives and association with a small number of visible winners. Management fees provide a comfortable base regardless of whether cash ever makes its way back to the original providers. Over time, the incentive to grow assets under management and preserve the franchise can become stronger than the incentive to be radically honest about risk and return.Layer a genuine power law on top of that structure and you get a peculiar mix. A few outliers really do pay for many failed bets. At the same time, the presence of too much capital chasing too few viable "fund returners" distorts entire markets. Herding into fashionable themes drives valuations to levels that require perfection to justify. Companies are told to use abundant capital to undercut prices, flood channels and crush competition in order to become platforms. The health of the underlying market is treated as someone else's problem. Capital inefficiency enters through the front door.When conditions reverse, the effect is violent. Boards that once demanded growth at any cost pivot to austerity. Prices rise, service levels fall, teams are cut. Smaller competitors are gone. Customers and communities that built around the subsidised product are left with brittle infrastructure. All of this is rationalised as a necessary side effect of "swinging for the fences".From a narrow fund perspective this can be defended. From a societal perspective it is hard to justify. Venture is not playing with toy companies. It is shaping transportation, health, communication, education and governance. When incentives push the system toward spectacle and away from resilience, power law rhetoric becomes an excuse, not an explanation.
Why Fixing Venture Is Not OptionalIt is possible to shrug and say that this is how markets work. If founders do not like it, they can bootstrap. If customers do not like it, they can switch tools. If LPs do not like returns, they can allocate elsewhere. Capital will always flow to something.That line of thinking misses what is actually at stake. Venture capital is not just another asset class. It is one of the main coordination layers between raw human imagination and deployed infrastructure. It decides which visions of the future are given enough time and money to harden into reality. It decides whether the default social technology stack is addictive and extractive or boring and humane. Over a long enough horizon, it participates in defining what it means to live a normal life.When the industry is misaligned, entire categories of possible futures never get explored at scale. Tools that could repair attention instead of harvesting it remain niche. Community-owned infrastructure that could rebalance power between platforms and participants dies at prototype stage. Hard, slow ideas in climate, health, food and governance are passed over in favour of the next incremental arbitrage in advertising, engagement or financial speculation.Fixing venture is not about protecting founder feelings or preserving VCs' reputations. It is about deciding whether we are comfortable routing our collective future through a system that currently confuses comfort with wisdom and pedigree with potential. If the answer is no, then the redesign work is not a side quest. It is part of the basic civic task of building a world that does more than optimise short term marks on spreadsheets.
Where Change Would Have to HappenA healthier version of venture does not require miracles. It requires a different set of defaults.On sourcing, it means treating geography and pedigree as what they are. Weak priors, not hard gates. That implies building channels into under-served ecosystems with the same seriousness that is currently reserved for elite accelerators. It implies actively looking for founders whose strength signals do not look like the last unicorn deck.On stage, it means being precise rather than aspirational. If a fund only wants companies that already show real traction and de-risked economics, it should say so and drop the "day zero" marketing. That clarity allows founders to design their funding strategy intelligently and opens space for other forms of capital to play the inception role venture refuses to play.On process, it means accepting that clarity is part of the job. A quick, thoughtful no is vastly more valuable than months of ambiguous interest. Respecting confidentiality in practice, not only in boilerplate, is part of that. So is drawing hard internal lines against using one founder's information to benefit another portfolio company.On structure, it means exploring models that tighten the link between VC economics and actual outcomes. Lower flat fees and more meaningful participation in upside. Evergreen or longer horizon vehicles where the underlying work demands patience. Hybrid structures that can support slower, compounding businesses instead of forcing everything through a single unicorn-or-bust funnel.None of this guarantees a perfect ecosystem. There will always be misjudgments, failed experiments and funds that underperform. The point is not to abolish error. The point is to make sure the errors we embed into our capital system do not systematically bias the future toward safe sameness at the exact moment when societies need genuine novelty the most.
IPO Genie to the RescueIndustries rarely implode in a single moment of drama. They drift. Venture capital drifted. It went from a focused form of risk capital that backed people ahead of proof to a more cautious, more pedigree driven, more fee dependent version of itself. Each step was easy to justify. Taken together, the arc is hard to ignore.We are now at the point where that arc and the needs of the world are pulling in opposite directions. The problems worth solving are complex, messy and politically uncomfortable. The capital that claims to specialise in solving them often prefers neat decks in familiar fonts.Venture will not vanish. Something will keep wearing that label. The real question is whether the people who run this industry are willing to treat its leverage over our shared future as a responsibility rather than a marketing angle. If they are, then the incentives, processes and structures can be rewritten. If they are not, the work of financing the future will migrate into new vehicles and new communities that take that responsibility more seriously.Either way, the decision will not be neutral. The way we fix, or fail to fix, venture capital is one of the quiet ways we decide what kind of world our children inherit. That is the scale of the conversation, whether the industry chooses to admit it or not.The insights contained herein are an integral part of IPO Genie company culture, dealflow and sourcing strategy. Therefore, by supporting IPO Genie presale, one undoubtedly supports non-pedigree founders with cutting-edge ideas, beneficial for the world at large, and a proper etiquette in the VC industry, without compromises.Join the IPO Genie presale now and be part of fixing venture capital.
Frequently Asked QuestionsQ: What's wrong with the current venture capital model?The current VC model has drifted from backing bold, unproven ideas toward chasing pedigree, safe bets, and familiar patterns. Funds often crowd into the same deals from the same networks, while genuinely innovative founders outside those circles struggle to get a first meeting, regardless of how strong their work is.Q: Why do retail investors have limited access to VC deals?Most venture capital is structured through closed-end funds that only accept capital from institutional investors and accredited individuals who meet high net-worth thresholds. This means the vast majority of people are excluded from the private stage where most of a company's value creation actually happens. Our article on how retail investors finally access private deals explores the solutions emerging today.Q: How can blockchain technology fix venture capital?Blockchain enables transparent, programmable investment rails that can widen access without relying on opaque intermediaries. Tokenized structures allow for lower minimum investments, on-chain audit trails, community-driven governance, and secondary liquidity windows that traditional VC fund structures simply cannot provide. Learn more in our comparison of tokenized securities vs traditional equity.
