As Populist as it May Feel, 98% of VCs Aren't Dumb
By now you will likely have read Andy Dunn's scathing post about Venture Capitalists in which he decries the industry's masses. — I read Andy's post with a knowing smile on my face. After all, I am no stranger to the publicly expressing …
Context & Ripple Effects
Andy Dunn's broadside against the venture industry landed on familiar terrain. The last big flare-up came in 2007, when TechCrunch asked whether it was reckoning day for venture capitalists, Paul Kedrosky debated whether VC bashing had gone passe, and Marc Andreessen answered with his own "truth about venture capitalists" series. In between came TheFunded's anonymous founder reviews, which drew open pushback from Sand Hill Road firms who called the feedback unfair.
This post is a rebuttal from inside the industry — the argument being that Dunn's critique is populist but wrong, since most VCs are competent even if the masses feel replaceable. Its spread across Medium and personal feeds shows the argument travels as a personality clash as much as an industry verdict.
First-order effects
- Entrepreneurs choosing investors now have two competing public frames — Dunn's commodity critique versus the incumbent defense — making VC selection criteria an explicit part of fundraising conversations rather than background noise.
- Venture capitalists are pushed to articulate their differentiated value-add publicly, the same defensive posture Sand Hill Road took against TheFunded's anonymous reviews back in 2008.
Second-order effects
- The critique pressures mid-tier firms whose returns least justify their fees to compete on brand and founder services, widening the gap between the small set of funds with real pricing power and the long tail Dunn describes.
- Recurring public spats like this feed entrepreneur-side tooling and forums for vetting investors, shifting information asymmetry toward founders much as TheFunded attempted.
Third-order effects
- If the pattern from 2007 through 2013 holds, VC bashing arrives with each funding-cycle inflection, and each round leaves the industry more transparent and more stratified between scarce top-tier capital and a commoditized remainder.
The trend: Public critiques of venture capital arrive cyclically with funding conditions, and each round forces VCs to defend their value-add more openly while concentrating perceived quality in fewer firms.