This essay was published alongside the Zócalo and CalMatters public program, “What Makes a Great California Idea?” Click here to watch the full conversation.

Will was a web designer living in Los Angeles and supporting his wife, an aspiring actress. He couldn’t shake the idea that he, too, should pursue his passion. So he started a side business on a new digital platform, AllDone (a pseudonym), which connected skilled service providers with customers. Will created a profile to offer guitar lessons, quickly landed a couple of students, and signed up for a subscription that allowed him to respond to potential clients for a flat fee of $20 per month.

Will’s business grew, and he quit web design to teach full-time. A few months later, he got a call from a customer support agent at AllDone. She had bad news: The platform would no longer offer subscriptions. Will would now have to pay a fee to respond to each potential client—adding up to an unsustainable hundreds of dollars a month. Will panicked and pleaded with the customer service agent to let him keep his subscription. “You guys have shattered my dreams!” he cried, when she told him the decision came from management, and there was nothing she could do.

I learned about Will’s story when I was conducting sociological research inside AllDone, one of many Silicon Valley startups aiming to profit from “disrupting” existing industries and building a new, digitally backed gig economy. Like so many workers who rely on apps to make a living, Will had invested in his business under one set of rules only for them to be suddenly and unilaterally altered. Workers criticized—and organized against—platforms like Uber and Instacart in their early years, when they repeatedly experimented with employment policies and wages in similar fashion.

There has been no shortage of debate about the role of arrogant CEOs and harmful algorithms in defining technological innovation. But we typically hear less about the systemic forces that generate those problems. A key culprit is venture capital (VC), which provides early funding for entrepreneurs who want to transform neat ideas into billion-dollar companies. For a business to have any chance of “changing the world” with its technology, it must mold itself to meet the demands of these funders. VCs have become folk heroes in Silicon Valley, widely revered for delivering innovation. Often, they help create products that succeed in short-term disruption—with questionable or even dangerous long-term effects.

VC compels startups to engage in relentless experimentation to generate exponential growth, ratcheting up their expectations at every stage of a firm’s development. The goal is to increase a startup’s valuation so the investor can sell their stake for far more than they originally paid for it. When a startup succeeds, investors’ profits can be stunning. Sequoia Capital’s initial outlay of $585,000 to Airbnb was worth $4 billion after the company went public.

Many celebrate venture capital’s role in creating a marketplace that nurtures the most innovative ideas. But the ideas that are “best” for capital markets—and for enriching the most affluent among us—aren’t always those that are best for societies. When well-connected entrepreneurs, VCs, and the wealthy institutions and individuals whose money they invest achieve massive payouts, other stakeholders are frequently left behind. For example, following Uber’s IPO in 2019, a combined $27.1 billion—about 40% of the company’s valuation—was captured by just three investment funds and the company’s two co-founders. Longtime Uber drivers, on the other hand, received bonuses that averaged $273 per person, or the equivalent of just a few cents per ride.

Tech startups that succeed are not necessarily those that figure out how to create a stable business model that yields consistent profits. Instead, the winners are often the companies that have attracted more capital than their competitors by pursuing reckless growth. Consumers and stakeholders end up missing out on some of the best, most sustainable, and perhaps even the most innovative products and services—tethered instead to the ones able to meet investors’ ever-escalating benchmarks.

The VC business model is powerful. But it is also relatively new, fueled by policies enacted in the late 1970s that incentivized startup investors, including big cuts to the capital gains tax rate and a Department of Labor ruling that allowed pension fund managers to invest in riskier assets. Since then, a small cadre of funders, over a third of whom are based in the Bay Area, have seized an outsized voice in determining the distribution of the economic risks and rewards associated with innovation.

As a new wave of generative AI startups takes center stage in Silicon Valley, venture capital is once again setting the agenda, unleashing experimental technologies that expose us all to substantial risk. How can we come together to minimize the harms generated by new technologies, while sharing their benefits—and fueling sustainable innovation—more broadly?

It’s time to look for better ways to invest in our future—ways that reward new ideas not just for their ability to inflate a startup’s valuation, but also for the benefits they bring to society as a whole. A brief survey of the tech landscape reveals numerous examples of potential alternatives to the VC model. Craigslist is privately owned and has largely resisted outside investment. Instead of constantly experimenting with its platform to increase engagement, serve advertisements, or harvest user data, the company is free to balance the profit motive with a public-service ethos.

Nonprofit video-captioning and translation platform Amara pays higher wages than similar for-profit labor platforms. Up & Go, a platform that allows customers in New York City to order house-cleaning services, is co-operatively owned and operated by the workers themselves. Ninety-five percent of the revenue generated through the platform is paid out to workers, resulting in wages about $5 per hour above the local average.

What these models have in common is the ability to reduce entrepreneurs’ dependence on external funds, and thus external control. Other measures can loosen venture capital’s grip on our innovation ecosystem, too: federal grant and loan programs that require founders to cap prices or share profits, publicly owned investment vehicles, and eliminating tax dodges.

By promoting and investing in businesses with alternative ownership structures, consumers, workers, activists, and governments can challenge venture capital’s winner-take-all model, creating ecosystems of smaller, more localized and specialized platforms that are more responsive to the people who use them and to the communities in which they are embedded. Workers like Will could build more stable livelihoods doing what they love; consumers could have more choices, and their money could directly support their neighbors and local communities instead of serving investors’ interests. Technological breakthroughs could really make life better, which is what innovation should be about. Curbing VCs’ influence isn’t about stifling innovation—it’s about making room for the rest of us to have a say in our technological future.