[mathattack]

Let the market decide this. My impression is that the average VC firm doesn't deserve the carry plus expenses. The great ones do. (And it's strange they all still charge the same variant of 2/20)

So what will the market decide? I have no idea.

But if the ex-Netscape/LoudCloud types can return good money to their investors, they will be trusted with more money. And this should continue. If they don't, the funding will dry up soon enough. The invisible hand will guide this, so there is no need to intervene. If 200 funds investing X dollars is better than 20 investing 10x, the returns will show it. If the status quo is somehow a disservice to innovation, then it becomes a national R&D funding issue rather than a VC issue.