It's reasonable when prestige is earned through individual achievements. But most of the time it's earned through affiliation. Complete outsiders can succeed, certainly - but the bar is much higher for them.
In Silicon Valley, affiliation to established institutions - schools, conglomerates, social circles - correlates with access to early-stage capital much more strongly than it correlates with actual performance as an entrepreneur.
This is bad for two reasons:
1) Silicon Valley investors, as a group, are wasting capital by investing too much in low-performing insiders, and not enough in high-performing outsiders.
2) Silicon Valley entrepreneurship amplifies social inequalities instead of reducing them, because a disproportionate share of entrepreneurial opportunities are reserved for insiders.
I definitely was a complete outsider when I moved to Silicon Valley: first generation immigrant, with no affiliations or credentials whatsoever, no traction, and a lot of personal debt. If YC hadn't taken a chance on us and written that $17,000 check, we probably would have never made it this far. And I had it easy compared to other outsiders: I had US citizenship, my english doesn't betray I'm a foreigner, and of course I'm a white male.