That's a great point, but I do think there is a legitimate counterpoint - that by shifting most of the risk from the founder (where $25-$100k is a lot of money) to the VC (where it ultimately is very little money) potentially eliminates a filter criteria and could create perverse incentives or lead to a scattershot approach.
"I believe in this idea so much I am willing to gamble my short-term financial future on it" is a great way to find out what people really care about.
The diversity issue is real though. As is the broader issue of wealthy people being able to take on much more risk than normal people, leading to a reinforcement cycle (winners keep winning) and a winner take all outcome.
Which, now that I think about it, pretty much describes US capitalism perfectly.
"I believe in this idea so much I am willing to gamble my short-term financial future on it" is a great way to find out what people really care about.
The diversity issue is real though. As is the broader issue of wealthy people being able to take on much more risk than normal people, leading to a reinforcement cycle (winners keep winning) and a winner take all outcome.
Which, now that I think about it, pretty much describes US capitalism perfectly.