Looking for venture capital funding? There's no question that you're in for an uphill battle. No surprise—VC funding is the creme de la creme of business investment. These guys know what they're doing, and they want a business that's going to make them big bucks. The problem, according to a Forbes columnist, is that VCs are only funding the flashiest, most exciting businesses—primarily in the tech industry. The result, he says, is that the model's screwed:

"Beneath all the glitter, venture-capital financing as practiced today in the U.S. is a broken model. Worse, thousands of companies that deserve funding aren't getting it."

The article goes on to say that there are few funding sources out there offering anything under $1 million, and even fewer opportunities still for businesses that don't have the sex appeal of potential tech blockbusters.

While the column makes a good point that it's unfortunate that VCs tend to ignore "perfectly viable" mid-sized businesses, it strikes me that he's misunderstanding the VC endgame. The point of venture capital funding isn't to invest in businesses that may only bring in mediocre returns. These guys only fund a handful of businesses each year because they're throwing big money at them, and because they want big returns. Sure VCs would have fewer failures if they invested in more typical mid-sized businesses, but then they wouldn't have the hugely profitable hits either. I don't think that this means that the VC model's broken—it's just how it works.