The Broken VC Model: Funding Familiarity, Not Innovation - By Tristan Gross - CEO & Founder
I recently had a conversation with an ex-venture capitalist who told me, with full confidence, that no one will invest more than $10M in just an idea. That statement didn’t just sound wrong—it felt like a betrayal of everything venture capital is supposed to stand for.
If an idea is going to get funded, it has to happen at the early stage. By the time a company crosses $1M in revenue, why would it even need a VC? At that point, alternative financing options like revenue-based funding, private debt, or even bootstrapping become more viable. More importantly, founders now have leverage. The irony is, VCs claim they want to fund game-changing startups, yet they hesitate to invest in the riskiest, most ambitious stages—the very point where funding is most needed.
The Broken VC Model: Funding Familiarity, Not Innovation
I grew up believing venture capital existed to back ambitious founders with big ideas, supporting them in the early days when capital is hardest to come by. But the reality? VCs today are increasingly funding “proven” industry veterans over the hungry, innovative founders who are actually trying to change the game. Instead of investing in disruptive ideas, they’re funding familiarity.
This shift is frustrating and borderline infuriating. Having raised capital for both pre-revenue startups and companies with existing revenue, I know firsthand how exhausting it is to challenge this outdated mindset. The core purpose of venture capital is to take risks on early-stage ideas in exchange for outsized returns. But today’s VCs are acting more like traditional investors, hesitant to deploy capital unless a company is already successful.
Canada’s Innovation Crisis
Meanwhile, Canada’s innovation landscape is crumbling. We have an influx of highly skilled engineers with no jobs and nothing to work on, even as large language models (LLMs) make engineering more powerful and efficient than ever. The talent is here. The drive is here. But the funding isn’t. This inspired me to launch GROSS INNOVATIONS INC, a company born out of necessity to give brilliant, overlooked talent the opportunity to build the next generation of technology. Too many engineers are being left behind while capital flows into the same inner circles.
Instead of funding high-potential early-stage founders, VCs are recycling money among their friends. Grants are being awarded to firms that already have deep cash reserves. And worst of all, funding is being poured into startups with vague, uninspired missions—especially those hiding behind the buzzword of “AI.” I say this as someone who has helped build a funded firm in SF and Palo Alto. The difference in mentality is stark.
To the VCs Who Refuse to Back New Founders: You Are Failing
To the venture capitalists who refuse to take risks on new founders: you are failing the system you claim to uphold. Keep funneling money into your friends’ pockets while stifling real innovation. The next wave of groundbreaking companies will emerge despite you, not because of you.
The future of innovation isn’t going to come from the same old networks. It will come from those who are bold enough to bet on ideas, not just financial spreadsheets. The real visionaries are out here building—with or without your backing.
