The Biggest Myth in Venture Capital Is That It’s a Meritocracy
One of the biggest myths in venture capital is that it is a pure meritocracy.
The mythology is seductive. The best ideas win. The smartest founders rise to the top. Capital flows to the strongest opportunities. Innovation is rewarded objectively.
But the deeper you get inside the system, the more you realize something uncomfortable. A lot of what gets mistaken for talent is actually proximity. Proximity to networks. Proximity to trust. Proximity to institutions that already signal legitimacy.
In a recent conversation on Breaking Precedent, Paige Hendrix Buckner said something that captured this dynamic perfectly. Reflecting on advice her father gave her as a child, she said:
“You can do whatever you want. And it’s about who you know, not what you know.”
At first glance, that sounds cynical. But I actually think it is deeply observant.
Most systems of power do not operate purely on talent. They operate on trust. And trust, especially in industries like venture capital, is often inherited socially long before it is earned professionally.
Paige put it even more directly later in our conversation:
“We move at the speed of trust.”
That line stayed with me because it explains so much about how venture capital actually functions beneath the surface.
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Investors like to believe they are making purely rational decisions. But early-stage investing is fundamentally emotional. You are making bets under extreme uncertainty. There is often very little data. So people look for signals that help them feel safe. Did this founder go to the right school? Do they know the right people? Has someone already trusted them before? Do they look and sound like other successful founders?
That is not meritocracy. That is pattern recognition.
And pattern recognition is only useful if your original patterns were broad enough to begin with.
The problem is that most systems of power were not built broadly. They were built narrowly, then reinforced over time by familiarity. Success starts to look less like raw potential and more like recognizable proximity to existing power structures.
I saw this firsthand as a founder.
When I was building TaskRabbit, I often felt like I was translating my vision across an invisible cultural gap. I was pitching a future that many investors could not yet see while also navigating assumptions about what a “credible” founder looked like. Some rooms immediately understood the opportunity. Others could only compare me against precedents they had already funded before.
Paige described something very similar. Speaking about venture firms, she said:
“You’re trying to de-risk as much as possible… I trust you because my friend knows you, we went to the same school, we have the same values.”
That is not corruption. It is human nature. But systems built entirely on inherited trust eventually become structurally limited in what they can see.
And that limitation creates massive blind spots.
One of the things I found most powerful about Paige’s perspective is that she does not frame this simply as a moral issue. She frames it as a missed opportunity issue.
That distinction matters.
Because when industries only fund familiar patterns, they miss entire categories of insight, innovation, and lived experience.
Paige talked about women investors being the first people in their firms to recognize opportunities others overlooked entirely. She described women having to explain markets like IVF to investment partners who had never considered them meaningful categories before.
That is what happens when the people making decisions are disconnected from the problems they are solving.
The people closest to the problem are often the people most capable of building the solution. But if access to capital depends primarily on existing trust networks, many of those founders never even get into the room.
And then the industry convinces itself that the absence of funding reflects an absence of talent.
That is the illusion.
Paige said something else during our conversation that I have continued thinking about:
“There’s so much untapped potential and opportunity.”
I think that is the real story here.
The future is rarely created by people simply repeating the patterns of the past. Real innovation often comes from outsiders. From people who see things differently because they have lived differently. From people who notice opportunities insiders no longer see because the system feels normal to them.
That is why expanding access matters. Not because it is charitable. Because it is strategically intelligent.
The strongest systems are not the ones that endlessly recycle the same forms of power. The strongest systems are the ones capable of evolving their understanding of where value actually comes from.
And sometimes that starts with questioning the assumptions hidden inside the word “merit.”
Because if opportunity is distributed unevenly, then talent alone can never fully explain outcomes.
Access matters. Trust matters. Networks matter.
The question is whether we are willing to acknowledge that honestly enough to build something better.
So I will leave you with this: Where in your own industry are people mistaking familiarity for excellence?
What opportunities are being missed because the same patterns keep getting rewarded over and over again?
