The Myth of Silicon Valley Meritocracy Destroyed In One Data Point
Ding-dong, it's official: Silicon Valley's dream of a meritocracy—where innovative ideas from scrappy entrepreneurs hustle their way to the top—is dead. A new analysis from Reuters reporter Sarah McBride found that the startups getting funded by top venture capitalists have one thing in common: pedigree.
McBride looked at 88 startups based in Silicon Valley that received "Series A" funding from the one of the top five VC firms in 2011, 2012, or the first half of 2013. Her analysis "shows that 70 were founded by people who hailed from what could be described as the traditional Silicon Valley cohort."
That means the founders had held a senior position at a big technology firm, worked at a well-connected smaller one, started a successful company already, or attended one of just three universities - Stanford, Harvard and Massachusetts Institute of Technology.
The analysis, which looked only at Northern California companies funded by Accel Partners, Andreessen Horowitz, Benchmark Capital, Greylock Partners and Sequoia Capital, generally supports academic research showing that tech entrepreneurs are substantially wealthier and better educated than the population at large.
Reuters' analysis offers solid data to support claims of race, gender, and class bias in tech industry. Faced with this evidence, Silicon Valley investors—who have been throwing around the term "empirical evidence" pretty loosely these days—still rejected her findings.
"I don't really think that a kid coming out of Harvard or MIT is actually well connected," Horowitz said by email, citing examples such as Facebook founder Mark Zuckerberg. Though he attended Harvard, Zuckerberg was unconnected until entrepreneur Sean Parker sought him out and made Silicon Valley introductions for him, Horowitz said.
Attending a top school, or performing well at a hyper-competitive company such as Google, can serve as a marker that the person can compete globally, Horowitz said, but it isn't necessary to succeed. Venture investors are backing people as much as ideas, he added, and thus have no choice but to insist that the entrepreneur have a certain level of qualification or reputation.
Faced with "no choice," how do these VC gatekeepers invest their billions?
Yet not everyone has to hustle in quite the same way. Brit Morin raised $1.25 million for her craft-oriented Web site, Brit & Co., months after its 2011 launch, and another $6.3 million earlier this year.
Investors included Founders Fund, which was co-founded by Thiel, an early backer of Facebook, where Brit Morin's husband Dave was an early employee. He later launched the social-networking site Path.
When asked whether her connections got her the cash, Morin said: "I don't think any VC is going to invest in a company that doesn't have a clear business strategy."
RIP, Meritocracy (??-2013).
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