A Most Useful Misunderstanding

One of the most interesting things about Silicon Valley is that a great deal of the value created by the culture is due to a very healthy and useful misunderstanding: that venture capital is a broadly applicable funding model. One of the first, and most surprising things you learn when you first talk to experienced VCs is that "venture fundable" is actually a fairly narrow class of ideas. I am not talking here about good versus bad ideas, or whether or not a particular VC is visionary enough to see the potential in you and your idea. I am talking about some prosaic structural limits and requirements that act as almost a bureaucratic filter on what sorts of ideas can be funded. As a result of these requirements, many good ideas are not venture fundable, while many bad ideas are. So why is this a good misunderstanding, and how can you get to an understanding that does not kill the benefits of the misunderstanding?

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