Here's a business plan that sucks:

Ironically, you've chosen a business plan that doesn't necessarily suck at all. (Although it does seem to be illegal now.)

That's what banks are supposed to do: concentrate the risk-analysis function of society.

...

In the real world, of course, people lend to their golfing buddies or on the basis of whether the business plan is a spiffy ppt, the banking sector is incresingly concentrated so there is less opportunity to go to a different bank for funding, and so on...

Bingo.

My point is partly that finance is supposedly about risk analysis in the same way that job interviews are about finding the best person.

Supposedly it's a formal, serious process. In practice it's often a bit of a pantomime, where you'll be assessed on your dress sense, social caste, and overall seriousness as much as on the numbers.

Has there even been a formal study of the predictive accuracy of investment models? Consumer credit scoring seems a fairly simple solved problem - providing nothing blows up - but is there any evidence that business plan risk analysis really does model investment outcomes accurately?

As for VC - the standard VC game is to throw a lot of money at various projects and hope some of it sticks.

It turns out to be fairly easy to make money like this in any market where large IPOs and/or sales to a bigger idiot are possible, because you only need one big success in every ten or twenty to be in profit overall - and you can write the other losses off against tax.