For decades, governments around the world have pursued a remarkably similar strategy for building entrepreneurial economies: replicating Silicon Valley.

The formula seems compelling. Build venture funds. Attract investors. Identify high-potential innovations. Develop accelerators. Connect entrepreneurs to capital. Hope to create unicorns.

But a landmark 2026 NBER study of more than 100,000 venture capital professionals raises a fundamental question about that formula:

What if we have put venture capital too close to the center of entrepreneurship?

The implications extend beyond government policy. They potentially matter to entrepreneurs seeking success, financiers searching for winners, business schools teaching entrepreneurship, and corporations and governments funding innovation.

This is the first in a series combining the new NBER findings with my research into billion-dollar Founder-CEOs to examine some widely accepted assumptions about high-potential entrepreneurship.

We Start With Governments

Around the world, public institutions have poured billions into state-backed venture funds, funds-of-funds, investor incentives, accelerators, and other efforts to reproduce Silicon Valley’s entrepreneurial success.

But what if governments have been trying to replicate one of Silicon Valley’s most visible ingredients – venture capital – without first developing one of its most important inputs: capable entrepreneurs?

What if public policy has the sequence backward?

Landmark Study Of 100,000 Venture Capitalists

A landmark 2026 study from the National Bureau of Economic Research (NBER) raises a fundamental question about the VC-focused approach. The NBER working paper, Human Capital in Venture Capital: Evidence From 100,000 Venture Capitalists , by Blake Jackson and Stanford University Professor Ilya A. Strebulaev, analyzes more than 100,000 professionals affiliated with U.S. VC firms.

The findings are striking . According to the study, just 5% of VCs generate 90% of investment profits. And fewer than 40% of VCs with investments are ever credited with a successful investment.

This does not mean venture capital does not work. It suggests something potentially more consequential for governments: VC performance is extraordinarily concentrated.

If a very small percentage of venture capitalists generate most investment profits, should governments continue putting VC near the center of entrepreneurship development?

Or should they put capable entrepreneurs at the center?

Should they develop Founder-CEO capability broadly, let performance reveal which entrepreneurs and ventures have high potential, and then connect them with the right financing at the right stage?

The objective should not be for governments, universities, or economic-development organizations to predict the winners before they have evidence.

Develop Broadly. Let Performance Select. Then Finance Intelligently.

Venture capital is not a commodity where simply creating more of it necessarily creates more successful ventures. Who provides the capital, to whom, and at what stage appears to matter enormously.

The researchers also find evidence that attaining “superstar” status increases subsequent access to highly valued startups. Success can improve access to opportunities, which can contribute to more success.

This should not surprise anyone familiar with venture capital. Entrepreneurs have powerful reasons to seek highly successful VCs : track records can bring credibility, networks, experience, connections to future financing, and access to potential strategic partners and markets.

That makes the Silicon Valley model considerably more difficult to replicate than simply creating another venture fund.

Can Governments Replicate Silicon Valley By Replicating VC?

Governments often treat venture capital as a commodity for entrepreneurial success:

  • Silicon Valley has VC funds – create local VC funds.
  • Silicon Valley invests billions in startups – mobilize billions locally.
  • Silicon Valley entrepreneurs pitch to investors – teach local entrepreneurs to pitch.
  • Silicon Valley accelerates ventures with capital – build accelerators.

But are these the causes of Silicon Valley’s success, or some of its most visible features?

What If VC Needs Entrepreneurs More Than Entrepreneurs Need VC?

The NBER findings suggest that VC performance may depend on an interconnected combination of investor capability, reputation, networks, experience, deal flow, and access to exceptional entrepreneurs.

A newly created $500 million regional venture fund outside Silicon Valley and a $500 million fund managed by an elite Silicon Valley VC to invest in Silicon Valley may have the same amount of money. But they do not necessarily have the same opportunities and potential for success.

Are governments trying to replicate Silicon Valley’s capital without replicating the conditions that make its capital productive?

What Should Governments Build First?

Look at the opposite side of the table. While Jackson and Strebulaev examined venture capital through the lens of the investor, my own study of 87 billion-dollar Founder-CEOs analyzed entrepreneurial finance from the perspective of the entrepreneur.

The findings are strikingly complementary . Fully 94% of these Founder-CEOs either avoided venture capital or delayed it during their critical early growth phases.

Those who built billion-dollar companies without early VC include Sam Walton of Walmart, Dick Schulze of Best Buy, Michael Dell of Dell, Bob Kierlin of Fastenal, Michael Bloomberg of Bloomberg, Gaston Taratuta of Aleph, and Jon Oringer of Shutterstock.

Others, including Bill Gates, Jeff Bezos, Mark Zuckerberg, and Brian Chesky, used VC after demonstrating significant potential. And stayed in control of the ventures and the VCs.

The conclusion is not that venture capital is unnecessary. It is that VC was not the starting point for most of the billion-dollar Founder-CEOs I studied. They first built skills, strategies, customer acceptance, organizations, and evidence.

Capital was a follower – not the leader.

Develop Broadly. Let Performance Select.

Silicon Valley has an enormous advantage that governments cannot easily manufacture – much of the world’s entrepreneurial talent wants to go there. Its investors can select from an extraordinary concentration of entrepreneurs, technologies, experience, networks, and opportunities.

Other ecosystems may need a different strategy.

Instead of trying to identify winners at the beginning, when neither governments, investors, nor entrepreneurs know which ventures will succeed, develop Founder-CEO capability broadly and let performance reveal potential.

Teach entrepreneurs to recognize emerging trends, search for strategic fit, create superior customer value, find attractive customer segments and effective sales drivers, build competitive advantages, manage cash flow, and finance intelligently. Then let them test.

Prove potential rather than pitch it. Let customers, revenues, margins, cash flow, and competitive performance provide evidence. Let the market help identify which ventures have earned the right to scale.

Put Founder-CEO Capability At The Center

Instead of putting capital at the center and building entrepreneurship around it, put Founder-CEO capability at the center and build the financing system around entrepreneurs and ventures. Different ventures need different financing at different stages.

  • Some entrepreneurs can initially finance with savings, revenues, customers, suppliers, or strategic partners.
  • Others may benefit from angels, crowds, loans, government programs, or corporate investors.
  • Ventures that demonstrate high-growth potential may ultimately benefit enormously from the right VC.

The objective is to develop entrepreneurs capable of choosing the financing strategy that creates the greatest long-term value for the venture and themselves – not to necessarily avoid VC.

From Capability to Evidence to Capital

This produces a different sequence for entrepreneurial development:

From Founder-CEO capability → Smart startup financing → Strategic fit → Commercial evidence → Growth financing → Scale.

Compare that with the implicit sequence in many entrepreneurship programs:

From Idea → Pitch → Incubator and angels → Takeoff → VC → Scale.

The distinction is important. In the conventional model, investors are expected to select potential before entrepreneurs have created much evidence.

In the capability-led model, entrepreneurs create evidence that allows investors, ecosystems, and entrepreneurs themselves to make better decisions.

Capital becomes an accelerant of demonstrated potential rather than a substitute for developing it.

What Should Governments Fund?

Governments do not need to abandon venture capital. But instead of primarily asking how to increase the supply of VC, they could ask:

  • How much are we investing in developing Founder-CEO capability?
  • Are entrepreneurs learning how to find strategic fit and create commercial evidence, or mainly how to pitch? Or product-market fit, which sometimes works well in Silicon Valley to attract the top VCs?
  • Do we have the right financing mix for different stages, or are we treating VC as the preferred destination?

Those may be more important questions than how many venture funds an ecosystem has created.

Find The Founder-CEOs Nobody Has Found

Silicon Valley can select because much of the world sends it talent. Other ecosystems may need to develop broadly so hidden talent can reveal itself.

The next Sam Walton may not attend Stanford. The next Michael Dell may not win a pitch competition. The next globally dominant Founder-CEO may emerge from Minneapolis, Munich, Mumbai, Lagos, or Buenos Aires.

A capital-led ecosystem needs investors to identify that entrepreneur early.

A capability-led ecosystem can help entrepreneurs develop, test, create evidence, and become visible through performance.

Instead of trying to pick winners before the race begins, develop more capable competitors and let the race reveal the winners .

Rethinking VC And Entrepreneurship

The NBER study does not prove that governments should stop supporting venture capital. Nor do Jackson and Strebulaev make the policy argument I am making here.

Their research demonstrates something more nuanced and very useful: VC performance is extraordinarily concentrated, investor-specific skill matters, and reputation and access can reinforce one another.

My research raises the complementary question from the entrepreneur’s side. If 94% of the billion-dollar Founder-CEOs I studied delayed or avoided VC, should early access to VC be one of the principal objectives of the entrepreneurship ecosystem and business-school entrepreneurial education? Or should the principal objective be developing the people capable of building high-potential ventures?

Build Founder-CEO Capability Broadly.

Don’t build an entrepreneurship ecosystem around the assumption that more VC automatically produces more successful ventures. Let entrepreneurs create evidence. Let performance reveal potential. Then let the right financiers seek the right ventures.

MY TAKE: Jackson and Strebulaev studied venture capitalists. My research studied billion-dollar Founder-CEOs. Put the findings together and they raise a fundamental question for governments trying to build entrepreneurial ecosystems: Should capital be the starting point – or should capable entrepreneurs?

Don’t abandon venture capital. Put it in its proper place. Silicon Valley can select from an extraordinary concentration of entrepreneurial talent. Other ecosystems may need to develop broadly so hidden talent can reveal itself.

Governments have spent decades trying to bring VC to their entrepreneurs. And educational institutions around the world have followed the entrepreneurship models developed at Stanford, Harvard, and other elite institutions .

But strategies developed in elite entrepreneurial ecosystems may work best because of the extraordinary talent, networks, capital, and opportunities those ecosystems already possess or attract.

The mistake is not Stanford’s model. The mistake may be assuming Stanford’s model is universally transferable.

It is time for the rest of the entrepreneurial ecosystem to demonstrate leadership rather than blind imitation: develop the model that fits its entrepreneurs, its capabilities, and its ecosystem.

The next generation of entrepreneurship policy should focus on developing entrepreneurs that the best capital wants to find. Start by teaching Founder-CEO skills – developing capability is what educational institutions were created to do.