Great post. You head the nail on the head in terms of what I was thinking when I read some of Fred’s comments. I agree that he knows entrepreneurs well, but I also agree that there are a lot of viable businesses out there that don’t receive funding. Heck a large portion of them never go after venture funding. They grow organically through the same principles that built our modern economy. And you’re definitely right that the economy is built on the backbone of small businesses, many of which are family owned/operated. If you go to Europe, you will find this point is even more true there, which is one of the reasons why there are a lot of sectors/regions in Europe that aren’t as badly impacted by the global downturn.

Overall, though, I agree there isn’t “too much capital” in venture capital, because measuring the top 20 firms/funds doesn’t even account for half of the overall venture capital market. Sure, it may account for the majority of Series B+ financings, but that is not where all the capital is. I think this is a good example where we have to step away from the bubble for a few moments and look at what’s happening through a different lens than perhaps what we’re used to. I’ve had to do that numerous times in the last year, and even though it can be humbling, it will definitely help provide perspective. Again, great post, Scott!