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- Is there Prejudice in Venture?
Is there Prejudice in Venture?
(Plus an interesting article from Harvard Business Review)
Delivered January 31, 2025 @ 5:00pm ET
Table of Contents
Welcome! ✋
Happy Friday everyone and Happy Holidays! My name is Gerry Hays, and for lack of a better description, I’m the custodian and convener of Doriot, a movement to break open the gates of venture and expand opportunity beyond an elite few.
I’ve been in the game of venture founder, investor, researcher, inventor, author, game designer, and professor. I’ve built companies and developed a global venture portfolio entirely from the great state of Indiana, all while teaching over 6,000 undergraduates and MBAs at Indiana University, as well as in Croatia, Hong Kong, Slovenia, and Singapore.
Democratize Venture reflects my take on venture — exploring how we can create new, more inclusive systems based on what I believe is relevant and important today — and insights into the mental strategies behind wealth building, a core aspect of venture. Much of what I share stems from discussions I have in the classroom.
This Week’s Highlights in the Democratize Venture Space
🥂 Huge congratulations to our friend Jonny Price on his promotion to President of Wefunder! Jonny has been a relentless advocate in the retail venture space, and there’s no one better to lead the charge in making startup investing more accessible to everyone. Well deserved!
🙌 An article was released on Harvard Business Review called Understanding “New Power”. The article article explores the shift from "old power" - exclusive, top-down, and hoarded - to "new power" - open, participatory, and decentralized. The authors do an excellent job describing the factors that will shape the future of venture. 🚀
🪙 As we hinted few weeks back, the crypto community expects changes with respect to how the SEC treats crypto. This week, a16z, put out their positions including: 1) Increasing Reg CF offering limits from $5MM to $75MM per year; 👀 and 2) allowing exchanges to allow for the immediate trading of any asset for which the platform can provide investors with accurate, current information. Aggressive ask indeed.
Top of mind: Prejudice in Venture
This week, I ran an experiment to show my students how bias — not logic — often drives investment decisions. Enjoy.
“When dealing with people, remember you are not dealing with creatures of logic, but with creatures bristling with prejudice and motivated by pride and vanity”
— Dale Carnegie, author, How to Win Friends and Influence People
Dale Carnegie
Earlier this week, I gave my students a due diligence report on a startup that raised capital in 2023. I asked them to form venture fund groups, analyze the deal, and decide whether or not to invest.
Every single group passed.
Then I smiled and said, “To all you aspiring entrepreneurs, welcome to the world of venture capital.”
For the last 30 minutes of class, we broke down the deal by first principles — not opinions, not gut feelings. We analyzed the market, business model, team, and competitive advantage. At the end of the session, I revealed how the company is performing today (full disclosure: Doriot is an investor):
The startup doubled revenue in 2024, hitting $1M ARR with a 94% renewal rate of their subscription product. Heads shook, and people laughed — because they realized how easily they had dismissed a company that had a credible shot at winning.
Walking around the room, during the venture group discussions, I heard the same statements over and over again:
❌ "I would never use this service."
❌ "It feels like another company does this better."
Each group reached consensus based snap judgments and then spent the rest of the group discussion justifying it. They weren’t doing anything “wrong” — they were just doing what most people do (including many venture investors).
In early-stage investing, there is no absolute proof. So what investors tend to rely upon are patterns, biases, and gut reactions. But, unfortunately, this process has real consequences. Biases decide who gets funded and who doesn’t.
Some Biases That Shape Venture Capital
As a general rule, founders who don’t fit the pattern — whether due to gender, race, age, or any other trait that doesn’t align with what VCs have historically backed — face a much harder time raising capital. That’s because VCs tend to bet on what feels familiar. They repeatedly fund the same types of founders, from the same places, with the same backgrounds. For example, DocSend analyzed thousands of pitch decks and found that female-led founders were getting 51% less meetings than their male counterparts. This despite the fact data shows that female founders outperform their male counterparts.
Here are some other common biases in venture:
🚀 Young vs. Older Entrepreneurs
Bias: Young founders are more innovative, adaptable, and risk-taking — the next Zuckerberg.
Reality: The average successful founder is 45 (MIT study). Experience, leadership, and industry knowledge win over youth.
🌎 Silicon Valley vs. The Midwest
Bias: The best startups come from the Bay Area, where the “real” innovation happens.
Reality: Silicon Valley has higher burn rates, while Midwestern startups are more capital-efficient and often more sustainable.
🎓 Target Schools vs. Non-Target Schools
Bias: The best founders come from Stanford, Harvard, and MIT — the “elite signal.”
Reality: Great founders come from anywhere. Many legendary entrepreneurs (Bezos, Musk, Dell, Jobs, Andreessen) didn’t follow this script. Also, Sara Blakely (Florida State), Whitney Herd (SMU), Tracy Young (California State U), and Lisa Stone (Wellesley) are some of the most successful venture-backed female founders, non of which attended a target school.
To be fair, familiarity is a powerful catalyst for decision-making in risky and uncertain situations — we all rely on it when needed. After all, we’re human. But leaning too heavily on familiar patterns also means overlooking great opportunities.
So my message to students was simple: Set aside their biases and analyze each opportunity at the first-principle level. The question shouldn’t be, “Do I personally feel this company can be successful? Rather, it should be “Is this a credible deal based on the business model, team, market, and competitive advantages?” If the answer is yes, and the offering is priced and structured correctly, then put a small amount of capital to work — then repeat this across 25–50 credible deals. That’s how you win as a venture investor.
Doriot Deal Updates
Timeplast, a developer of a techno-organic material that gets dissolved within 60 hours of being discarded, is raising on Dealmaker at a $98MM valuation. Doriot invested in their previous round at a $40MM Valuation. View our Due Diligence report here.
Pirouette Pharma (previously Pirouette Medical), a company aiming to provide convenient healthcare anywhere through its advanced auto-injectors, will be featured on Wefunder’s next live pitch on February 4, 2:00pm ET. You can register here. Doriot invested in this round. You can view our Due Diligence report here.
Qnetic, developer of a power-to-power flywheel energy storage system that is sustainable, long-life, and low-cost, has nearly reached it’s goal in their current Wefunder round and will also be pitching at Wefunder’s next live pitch event on Febuary 4. Doriot invested in their 2023 round. You can view our Due Diligence report here.
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Enjoy the weekend!
Sincerely, -gerry ([email protected])
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