Opinion | This Column Is Dedicated to Silicon Valley Venture Capitalists

Bust out your tiniest violin, because I’m about to stand up for Silicon Valley venture capitalists. The industry is not nearly as insufferable and out of touch as some of its blustering online influencers might lead you to believe. And despite its recent troubles, the world continues to need places like Silicon Valley and its financiers of risky ideas.

When Silicon Valley Bank was taken over by the Federal Deposit Insurance Corporation, some of the start-up world’s best-known voices — or, at least, its most aggressively online voices, several of them venture capitalists — swarmed Twitter with shrill demands for a full federal bailout of S.V.B. customers.

Whatever the economic merit to making the bank’s depositors whole, the V.C.s’ sky-is-falling rhetoric did seem a bit rich. Some of those most clamorous for government intervention in S.V.B., like David Sacks of Craft Ventures, have often aligned themselves with Peter Thiel’s brand of fair-weather libertarianism. When it was their industry’s money at stake, though, the long arm of the government apparently looked a lot more comforting.

Writing in Slate, Edward Ongweso Jr. argued that their Twitter “tantrum” over S.V.B. offered “a glimpse into how reckless venture capitalists are in pursuit of something they want, so long as it doesn’t bear any risk to them.”

Ongweso teases from V.C. tweets about the bank’s collapse an indictment of the entire V.C. business, questioning its essential utility to America’s economy and society. As he and other critics note, it’s an industry that talks a big game about embracing innovation but has tended to operate as a clubby network of mostly white dudes given to herdlike bets on similar ideas. It often props up businesses that profit a few — see crypto and the gig economy — but rarely prioritizes broad social or economic utility. And it has grown its fortunes in unusually fertile ground: more than a decade of low interest rates that sent hundreds of billions of easy money sloshing into V.C.s’ coffers.

To which I say: OK, but not all V.C.s and not all the time. Ongweso and other Valley critics aren’t off base, but there’s a risk in overvilifying the machinery of Silicon Valley based on its noisiest personages in its most frothy times. And while there are lots of flaws in the V.C. model, I also wonder if it’s a bit like that quip about democracy attributed to Churchill — maybe Silicon Valley is the worst way to fund inventions except for all the others.

After all, for all its faults, Silicon Valley has for decades been among the country’s most valuable economic assets. Along with research funding and other subsidies by the government, it’s one of the primary reasons the United States maintains global technological supremacy. It has also produced genuine advances that have improved our lives; from Zoom to Slack and even to gig-economy companies like DoorDash, the entire work-at-home apparatus that held up much of the economy through the pandemic was built on the back of venture capital.

And while Americans might be burned out on technology, we can’t shuck off the need for new things. To address some of humanity’s biggest challenges — climate change most pressingly — we will need venture capitalists to fund the best and riskiest ideas. It is V.C. firms that are financing research into next-generation batteries, new forms of energy and other ways to mitigate the worst effects of global warming.

Among Valley investors, Twitter-addled V.C.s like Sacks and the angel investor Jason Calacanis are far from the biggest names in town. Though they have a large presence online, they mostly invest millions or tens of millions of dollars at the earliest stages of companies; they are hardly emblematic of the Valley’s largest venture firms, which have raised and invested tens of billions of dollars over the years.

Nabeel Hyatt, a partner at Spark Capital who is one of the Valley’s most thoughtful V.C.s, told me that inferring the attitudes of the venture capital industry from its presence on Twitter “is like watching ‘The Real Housewives of Orange County’ and deciding that that’s how wives in Orange County act.”

Many top V.C.s did not spend the days after S.V.B.’s collapse tweeting furiously. Some in the industry instead circulated a more sober and substantive letter to officials outlining the risks of contagion. Hyatt and other V.C.s I spoke with were also doing what V.C.s are supposed to do — guiding lots of young, fragile companies through a sudden crisis that they were unprepared for.

You could call this clubby and herd-like, but you could also call it the secret to Silicon Valley’s success. One reason Silicon Valley works is that it collects expertise and institutional knowledge, learns from failures, and feeds those insights to succeeding generations of companies. That sort of guidance is exactly why many start-ups are likely to survive their bank’s blowup.

Jessica Lessin, the founder and chief executive of The Information — a publication that covers the start-up world and is itself a start-up whose money was tied up in S.V.B. — pointed to something that many here have noticed: Silicon Valley now faces more serious scrutiny than it used to, and it does seem to be learning from its mistakes.

I’ve been struck by how much more careful Sam Altman, the chief executive of the ChatGPT inventor OpenAI, is when talking about artificial intelligence than Mark Zuckerberg was when talking about social networking at the dawn of Facebook. Zuckerberg peddled his invention as indisputably good for humanity. Altman, meanwhile, says that while A.I. can be transformative, he’s “a little bit scared” of how it could be misused by authoritarian governments and how it might affect politics and the economy, and his company keeps that fear at the forefront when building its tech.

“There was a period about 10 years ago where tech wasn’t getting any scrutiny — it was all hype,” Lessin said. But we’re now well “beyond the days of celebrating every new thing that has an app,” she added, noting that what’s important now is focusing on the right problems. And V.C.s might help solve them.

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