Is Venture Intellectually Honest About What It’s Funding?
One question has always frustrated me in startup circles:
“How do you know people want your product?”
At the ideation stage, the honest answer is often:
Before PMF, I don’t know. That’s exactly what I’m trying to discover.
The problem is that this question collapses two fundamentally different phases of discovery.
Phase 1: Conceptual Validation
The first question is not whether people want the product.
It is whether the problem is real and whether a class of solution follows logically from that problem.
This is a reasoning exercise grounded in first principles, domain knowledge, and systems thinking.
For example:
If venture lacks a collective memory, then building a collective memory is a logically coherent product direction.
At this stage, the question is what should exist, not how it should be built.
Phase 2: Empirical Validation
Once the conceptual hypothesis is coherent, the task changes.
Now the questions become:
- How should the product be designed?
- Which workflow fits users best?
- Will people adopt it?
- Will they pay?
- Can it become a scalable business?
These questions require prototypes, customer interaction, and real-world experiments. This is where empirical validation becomes indispensable.
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In practice, the two often overlap, but one mode typically dominates depending on the stage of discovery.
Why the Distinction Matters
Conceptual validation is primarily an exercise of intellect and tacit knowledge accumulated from years of experience. Empirical validation is a resource-intensive exercise. Those have fundamentally different economics.
Conceptual validation
The main inputs are:
- thinking,
- domain knowledge,
- observation,
- first-principles reasoning,
- synthesis.
These are founder capabilities.
You don’t necessarily need outside capital to answer questions like:
- Is the problem real?
- Why does it exist?
- What class of solution should exist?
- Is the product logic internally coherent?
Empirical validation
The main inputs are:
- prototypes,
- engineering,
- design,
- distribution,
- pilots,
- customer onboarding,
- iteration.
These consume capital. This is where external funding has a clear economic justification.
When conceptual and empirical validation are collapsed, VCs often ask founders to come back with “more proof.”
The real question is often not about proof. It’s about who bears the cost of the (early-stage) empirical discovery process.
The confusion isn’t just conceptual — it’s psychological and economic. “Come back with more proof” sounds completely reasonable. No founder can object to wanting more evidence. As a result, founders naturally ask themselves: How much proof is enough? There is no principled answer, because the real question is often not about proof. When founders bear that cost, it may seem to benefit investors, but it can actually lead to suboptimal outcomes for both sides.
If the conceptual foundation has been properly assessed by both founders and investors, the question should no longer be “Can you prove it?” but “Is this hypothesis worth funding to test empirically?” Whatever the investment model, this distinction would make venture more intellectually honest about what it’s funding.
The ecosystem has normalized founder-funded discovery. It’s become the default expectation that founders will absorb a significant part of the empirical discovery cost before institutional capital enters. Because it’s the norm, people rarely question the underlying logic. Programs like Antler are still an exception. Most capital in venture is not deployed in this way. Even within pre-seed, relatively few firms fund founder before there is substantial evidence. Also worth noting: Antler changes the entry point, but not necessarily the dominant logic of validation.
Until we fix this, the lack of investable startups will likely persist. If empirical discovery were funded more explicitly, more conceptually strong ideas would reach empirical validation and become investable companies that never exist under the current model.
