The investment team at the Kauffman Foundation believes the venture capital industry is broken and they -- or rather investors in VC funds -- are partially to blame. The report condemns venture firms for being too big, not delivering returns, and not adjusting to the times. But then it blames the situation on a misalignment of incentives: Namely, limited partners that invest in venture firms have done so in a way that encouraged VCs to raise huge funds at a time when huge funds weren't really warranted.
This is a very astute article on the dysfunctional state of the VC space. It also happens to mirror my thoughts on what is needed to bring the VC industry back into line with reality and to cause not only more but better funding deals to happen.