What Is This?
Venture capital is usually explained as a firm-level power law:
many investments -> a few breakout companies -> most returns
Blake Jackson and Ilya Strebulaev's new paper, Human Capital in Venture Capital: Evidence From 100,000 Venture Capitalists, pushes the model down one layer.
The power law is not only in startups or funds. It is also in the people inside VC.
The paper studies more than 100,000 professionals affiliated with U.S. VC firms. Its abstract reports three core findings:
- Investment success is extremely concentrated.
- Education, prior work experience, and demographics predict career progression and investment outcomes.
- Superstar recognition, measured through marginal Forbes Midas List inclusion, increases access to highly valued startups.
The clean model is:
human capital -> access -> better deals -> visible success -> more access
VC is not just capital allocation. It is a status-mediated labour market where skill, credentials, networks, and recognition compound.
Why Does It Matter?
Most outsiders model venture capital as money plus taste:
find good founders -> invest -> help -> exit
That is incomplete. In venture, getting access to the best possible companies is itself part of the job. The paper's reported Midas List result matters because it suggests status can change the opportunity set.
That creates a flywheel:
credible investor -> invited into stronger rounds -> higher chance of visible wins -> stronger reputation -> better future access
The uncomfortable part is that this can make ability and access hard to separate. A top VC may be better because they are skilled. They may also look better because the market lets them see better companies. Over time, those two effects reinforce each other.
The Three Layers Of VC Human Capital
1. Individual skill
Some investors appear to have persistent investor-specific skill. The paper's abstract says differences in education, prior work experience, and demographics predict career progression and investment outcomes.
That does not mean pedigree mechanically causes investment ability. It means observable human-capital variables carry information about who advances and who produces outcomes.
The useful lesson is:
VC performance is not only a firm brand; individual histories matter
2. Opportunity access
In public markets, an investor can usually buy the same listed stock as everyone else. In venture, access is rationed.
The best startups choose investors. Founders, insiders, angels, seed funds, lawyers, later-stage funds, and other VCs all shape who gets shown the deal.
That makes opportunity access part of performance.
skill matters, but so does being in the room before the price is fully bid up
3. Status amplification
The paper uses quasi-experimental variation around marginal Forbes Midas List inclusion. Its abstract reports that achieving superstar status increases access to highly valued startups.
That is the key mechanism. Recognition is not merely a trophy after performance. It can become an input into future performance.
recognition -> access to better startups -> higher expected upside -> stronger future record
This is a status flywheel.
Why The Power Law Shows Up In People
The paper reports that fewer than 40% of VCs with any investments are ever credited with a successful investment, and 90% of investment profits are generated by 5% of VCs.
That is not surprising once the market structure is clear.
VC has several compounding filters:
- only some people get hired into investment roles;
- only some investors get meaningful allocation authority;
- only some see the best founders early;
- only some can win competitive allocations;
- only some get credited publicly for outcomes;
- only some successes are large enough to matter at fund level.
Small early differences can become large later differences because the feedback loop is multiplicative.
slightly better access x slightly better judgment x slightly better brand x repeated over years = very unequal outcomes
The Midas List As A Market Signal
The Forbes Midas List matters here because it is an external status signal. It tells the market who has been publicly recognized as a top venture investor.
In a noisy market, signals do work:
founder uncertainty -> investor status signal -> easier selection / fundraising story
For a founder, adding a Midas investor can signal quality to later investors, recruits, customers, and press. For the investor, that signal may help win the next hot deal. For the ecosystem, the result is concentration.
The important distinction:
status can be both evidence of past skill and a cause of future advantage
That is why purely backward-looking rankings can change forward-looking outcomes.
Why Smart People Get This Wrong
They treat VC firms as the atomic unit
Firm brand matters, but the paper is about professionals. A fund's returns can hide individual variation: who sourced the company, who won allocation, who supported the founder, who got board influence, and who received attribution.
They confuse access with judgment
A great investor needs judgment. But venture returns are only observable after access. If two investors have equal judgment and one sees better companies, the second will look more skilled.
They underestimate signalling
VC is a repeated trust market. Founders cannot fully audit an investor's future value-add. They use signals: prior wins, firm brand, referrals, role history, elite networks, Midas recognition, and who else is in the round.
They assume merit and compounding are opposites
They can coexist. A person can be skilled and also benefit from self-reinforcing access. The harder question is how much of observed success is selection, skill, opportunity, and status amplification.
They read rankings as neutral measurement
Rankings do not only describe markets. In status markets, rankings can affect who gets access next.
How To Use This
Use the paper as a model for any market where scarce opportunities choose their capital provider.
Ask five questions:
Where is access rationed?
Who gets to see the opportunity before everyone else?What counts as human capital?
Education, prior operating experience, technical depth, founder empathy, network position, pattern recognition, or institutional brand?What is the public signal?
Midas List, prior unicorns, tier-one firm, famous angel checks, founder testimonials, podcast presence, or visible board seats?Does the signal change the opportunity set?
If recognition helps win better deals, the signal is causal, not just descriptive.Where can a new entrant break in?
New entrants need a wedge: proprietary sourcing, narrow domain expertise, founder trust, speed, operational value, geography, or a neglected market segment.
Practical Takeaways For Jamie
- Do not model VC as money with opinions. It is a human-capital and access market.
- Status can be productive capital. Recognition can create future deal flow, not just record past performance.
- For Micro-SaaS/D2C opportunity work, access is the lesson. The equivalent of VC deal access is getting close to real buyers before the pain is obvious to everyone.
- Small niches are break-in strategies. In a status-concentrated market, the non-famous entrant needs a proprietary wedge, not a generic “better judgment” claim.
- Track who gets access, not just who looks smart after the fact. In any opportunity market, ask who saw the deal early, why they saw it, and whether that advantage compounds.
What This Does Not Prove
This article is based on the paper's Crossref/SSRN metadata and abstract. The SSRN page and PDF were blocked by security verification from this environment, so the full methodology, controls, definitions, and tables were not independently inspected here.
Do not overread it as proving:
- pedigree causes investment skill;
- Midas inclusion alone makes someone a better investor;
- every top VC is mostly status rather than skill;
- VC success can be reduced to education and work history;
- the reported concentration applies identically outside U.S. VC firms;
- rankings are bad simply because they affect future access.
The safe conclusion is narrower:
VC outcomes appear highly concentrated at the individual-professional level, and status recognition can expand future access to valuable startups
Key Terms
- Human capital: skills, credentials, experiences, relationships, and traits that affect productivity or career outcomes.
- Deal access: the ability to see and win investment opportunities, especially before they become widely competed.
- Status signal: a public marker that helps others infer quality under uncertainty.
- Midas List: Forbes ranking of top venture capital investors, used in the paper as a measure of superstar recognition.
- Quasi-experimental variation: variation that approximates an experiment because some threshold or event creates comparable treated and untreated cases.
- Power law: a distribution where a small minority accounts for a very large share of outcomes.
Recall Questions
- Why is venture capital not just a capital-allocation market?
- What is the difference between investor skill and deal access?
- How can a ranking become causal rather than merely descriptive?
- Why does a status flywheel create concentration among individual VCs?
- What is the equivalent of “deal access” in Jamie's own opportunity work?
Best Resources to Learn More
- Jackson and Strebulaev's paper for the new large-sample evidence on VC professionals.
- Gompers, Gornall, Kaplan, and Strebulaev on how venture capitalists make decisions.
- Michael Spence on job-market signalling.
- Sherwin Rosen on superstar economics.
Sources
- Blake Jackson and Ilya A. Strebulaev, “Human Capital in Venture Capital: Evidence From 100,000 Venture Capitalists,” SSRN, 2026. DOI: https://doi.org/10.2139/ssrn.6995859. Crossref metadata accessed because direct SSRN page/PDF access was blocked by security verification from this environment.
- Paul Gompers, Will Gornall, Steven N. Kaplan, and Ilya A. Strebulaev, “How do venture capitalists make decisions?” Journal of Financial Economics, 2020. DOI: https://doi.org/10.1016/j.jfineco.2019.06.011
- Michael Spence, “Job Market Signaling,” Quarterly Journal of Economics, 1973. DOI: https://doi.org/10.2307/1882010
- Sherwin Rosen, “The Economics of Superstars,” The American Economic Review, 1981. JSTOR: https://www.jstor.org/stable/1803469