Venture capital might be considered an allocative puzzle. How does the venture capitalist choose from the myriad start-ups seeking funding?

In this episode, Marc Andreessen spends a good bit of time describing how he and his partner make such decisions and confront this challenge. Says Andreessen, “There are real limits to what you can know.”

We’d like to know what you think Hayek might have to say to Andreessen…How would Hayek advise Andreessen and his colleagues regarding their investment decisions?

Keep reading:
In F.A. Hayek’s famed 1945 article “The Use of Knowledge in Society,” he discusses these limits.

In your essay, describe how Andressen might make use of this piece. For example, to what extent is venture capital a planning process, in the sense that Hayek speaks of? Would venture capitalists face similar knowledge problems as those Hayek illustrates? How might such knowledge problems be mitigated?

Send essays to mail at econtalk dot org and for the subject line put “Contest.” Any format is fine; essays will be judged based on clarity, thoughtfulness, accuracy and the overall quality of the writing. Ideally, essays should be 500 words or less.

The best essay will be posted here at EconTalk. We reserve the right to have no winners if the essays do not reach an arbitrary standard of quality.