How about letting entrepreneurs decide who gets funded? My firm, Village Capital, has been doing just that for the past six years with our “peer-selected investment” model.
First, we recruit entrepreneurs focused on innovation around a particular problem statement — like financial inclusion or the health-wealth gap. Next, we select a group of 12 ventures and put them through our business development program. At the end, the entrepreneurs assess each other in an open and transparent process. The two highest-ranked ventures receive seed capital from VilCap Investments and co-investors.
We think this is the model of the future. Not only does it upend the perverse incentives and skewed power dynamics of traditional ventures capital, which you allude to; it also makes entrepreneurship more accessible for everyone. 38% of Village Capital’s peer-selected companies are women-led, and 25% of our portfolio companies in the US have Black or Latino co-founde