By now, you've likely heard how Peter Thiel parlayed a $500,000 investment in Facebook to a stake now worth $750 million. There's been a crush of coverage on his $220 million Founders Fund, which may well change the way entrepreneurs get paid in the Valley. We know about his mansion (he rents it — clever!), his butler, his early-morning jogs. But what no one ever says out loud: Thiel is gay.

Venture capital is a business about risk — but only the right kinds of risk. Unproven technology? Fine. A host of rivals? No problem. A gay founder? Oh, hey, wait a second. Not that there's anything wrong with that. But someone else, somewhere else, might take issue with it. That's VC thinking.

"Of course he's gay. Why would you mention that?" Here in northern California, where intolerance is the only thing we can't tolerate, even alluding to someone's sexual orientation is suspect. (Even if, like me, you're gay yourself.) Yet as one venture capitalist put it, "The VC industry is headquartered in Menlo Park, not northern California." On Sand Hill Road, like funds like. The clubby ranks of VCs are mostly straight, white and male. They instinctively prefer entrepreneurs who remind them of themselves. At best, it's a wrongheaded sense of caution. At worst, it's prejudice with a handy alibi.

The effects are hard to document. VCs fund so few of the companies they talk to that it's hard to prove a case of discrimination; there are a hundred reasons why they might pass on any given startup. But gay and lesbian entrepreneurs I've spoken to agree it's real. PlanetOut, the gay and lesbian portal, had to buy out Sequoia Capital, which had come to regret its investment in the company, before it found braver VCs and eventually went public. And really: How many out gay VCs do you know?

I think it explains a lot about Thiel: His disdain for convention, his quest to overturn established rules. Like the immigrant Jews who created Hollywood a century ago, a gay investor has no way to fit into the old establishment. That frees him or her to build a different, hopefully better system for identifying and rewarding talented individuals, and unleashing their work on the world.

That's why I think it's important to say this: Peter Thiel, the smartest VC in the world, is gay. More power to him.