Look, if you're a VC who goes to those "clubs", and you trust the people there and are comfortable giving them your money, _great_. Why should they be handing it out to you, with your no-revenue company and no prior associations?
It's reasonable when prestige is earned through individual achievements. But most of the time it's earned through affiliation. Complete outsiders can succeed, certainly - but the bar is much higher for them.
In Silicon Valley, affiliation to established institutions - schools, conglomerates, social circles - correlates with access to early-stage capital much more strongly than it correlates with actual performance as an entrepreneur.
This is bad for two reasons:
1) Silicon Valley investors, as a group, are wasting capital by investing too much in low-performing insiders, and not enough in high-performing outsiders.
2) Silicon Valley entrepreneurship amplifies social inequalities instead of reducing them, because a disproportionate share of entrepreneurial opportunities are reserved for insiders.
I definitely was a complete outsider when I moved to Silicon Valley: first generation immigrant, with no affiliations or credentials whatsoever, no traction, and a lot of personal debt. If YC hadn't taken a chance on us and written that $17,000 check, we probably would have never made it this far. And I had it easy compared to other outsiders: I had US citizenship, my english doesn't betray I'm a foreigner, and of course I'm a white male.
Palmer Luckey would have trouble getting funded with his VR headset in his hands, based on his background. VCs would sooner fund anyone that went to the same school they did.
https://www.amazon.com/Difference-Between-God-Larry-Ellison/...
Naturally you can expect more top school people to do well because they're smart overachievers.
Is there data you have on this? How big is the difference in funding uptake for students from Harvard versus students from low-class schools like Caltech?
Silicon Valley investors basically just invest randomly in people based on their membership in a club. It's only because a small percentage of them turn out not to be complete idiots that it works at all. The smartest of the 99% receive no funding, while the entirety of the 1% wealthiest do.
It's an insider's club built around the "top schools" (as they call themselves). You're either in the club or you're an outsider, and only a handful of token outsiders are needed for display purposes.
If you want help in Silicon Valley, you must have either: 1) a rapidly growing business (traction) 2) been accepted into a "top school" (pedigree)
It's not a conspiracy per se, it's just a result of rampant cronyism and nepotism. How do you think investors get their jobs after all...
Some notable examples of non-rich founders, that the rest of us can hope to emulate: Steve Jobs, John Carmack, Palmer Luckey, Linus Torvalds, Larry Ellison.