Capitalism isn't necessarily a fair system. The rich and powerful tend to ply their positions for more wealth and power. As for the rest of us, we're left to seek our advantages as best we can.

Late last week, Fusion politics and tech columnist Kevin Roose wrote a piece bemoaning the unfairness of venture capitalists funding one of their own. Specifically, he questioned Andreessen Horowitz for leading a $116 million round in 21 Inc., a bitcoin startup run by Balaji Srinivasan, who's also a partner at Andreessen Horowitz.

Roose compared the funding, humorously enough, to American Idol, if judge Simon Cowell were competing in the contest. Not really, venture capitalists say, because investing isn't a game. Even in today's overheated tech environment, where there's a race to put down capital on the next hot startup, funding someone you know isn't that unusual.

"We are looking for a return on our investments, we are not doing favors for people, and our limited partners expect a return," says Dan Ciporin, general partner of Canaan Partners in Menlo Park, California.

For its part, Canaan recently funded Kabam, a gaming site also funded recently by Alibaba, which put $120 million in the company. The company was started in 2006 by Canaan associate partner Kevin Chou, Ciporin says. Similarly, Cardlytics was started by former partner Scott Grimes, and Canaan has led many of the company's $170 million in funding rounds over the past three years.

More often than not in recent decades, entrepreneurial experience has afforded a launching pad to the venture capital world, and while it's more unusual for people to work their way back to operating a business once they've made general partner, it happens. Ciporin, for example, headed up, took it public in 2004, and then sold it to eBay for $600 million in 2005, before becoming a venture capitalist.

"From my perspective, the best investment you can make is someone you know, who you have worked with, and [you] know how they work and their perspectives, as opposed to someone with just a great idea," Ciporin says.

TechCrunch's CrunchBase Daily says VC firms funded 400 deals in the past five years where a venture capitalist also had a role in the company. The story notes that Peter Thiel, as is well known, invested in the big data analysis company Palantir, a company he also helped found.

But such stories stretch back even further than that. Former Kleiner Perkins Caufield and Byers venture capitalist Robert Swanson founded biotech company Genentech with Herbert Boyer 45 years ago, a company that Kleiner also funded. Similarly, Dubose Montgomery of Menlo Vetutures founded Gilead Sciences, the pharmaceutical company, in 1987. Menlo made a $2 million investment in the company early on.

As for the conception that venture capitalists are stealing entrepreneurs' best ideas, VCs say they sit through thousands of presentations for prospective deals, and part of the value they bring to the table is pattern recognition. They know what's likely to work and what's not. At the same time, venture capital is a small club of no more than a few hundred partners with active deals in a given year, so any bad behavior, like idea stealing, would tend to surface pretty quickly, venture capitalists say.

But funding and relationships with companies can also get pretty nuanced, others note. Companies might have started out in residence programs, and partners might serve as interim chief executives or marketing executives for companies that they fund.

What Is New

What's changed is how venture capitalists can benefit from the funding. Today, you have the likes of Aneel Bhusri, who is a general partner at Greylock Partners, starting companies such as cloud-based human resources company Workday, which also benefitted from nearly $100 million in funding from Greylock.

In the past, Bhusri may have only benefitted from the fund's returns. Today, it's more common for partners who found companies to retain founders' shares, and so they reap double rewards--on the fund's investment returns as well as from their ownership of the company. (Bhusri, for example, owned 19 percent of Workday's shares, according to Workday's initial public offering papers from 2012. Greylock also owned 11 percent of the company.) As long as such arrangements are disclosed to the limited partners, and they have no objections, there's nothing wrong with that, venture capitalists tell me.

In fact, such activity might create incentives to form the most successful companies, with the best teams possible, before they go public.

"There's nothing unethical or immoral [about] these actions," says David Zilberman, partner at Comcast Ventures. "These aren't public companies that trade on the open market."