However, I have to differ with him on the growth of VC and angel investing being an innovation. It is instead a reflection of increased concentration of wealth at the top of the food chain. And as for the growth of professional VC, there is less there than meets the eye (I am certain to get some enraged comments).
A friend who ran a successful VC firm (as in founded it and went successfully through two funds, seven years apart) is leaving the industry because he has concluded it adds no value. He argued that not only are the superior results concentrated in a few funds (the famous usual suspects) even their returns were the result of a very very few deals. Thus the profile of the industry is that the total industry returns are dependent on a few deals that return 50 to 100 to one. And he further argued that with the industry about to slip past the dot-com era in counting ten-year returns, that the returns were about to start to look awful and funding allocations by pension fund consultants would skew away from the industry.
<http://www.nakedcapitalism.com/2008/10/steve-waldman-on-good-and-bad-financial.html>