A huge problem in my opinion, is employee equity and compensation. No doubt, VCs are risking their money. But when you look at the system taking a few steps back, you see tons of VCs have made insane mounts of money in the last decade. Enough to buy castles, sports teams, and their own private islands.

Then you look at the swaths of tech workers who were there at the early stage. I've seen multiple large exits in startups. Places I've worked at or have had close friends. People who were there at the seed stage with barely a MVP, who built products, pulled all-nighters, and worked 7 days a week. Upon acquisition, the VCs made 10s of millions, the founders made 10s of millions and the employees got new car money (for 2 years of intense work getting paid well below market).

EDIT: Another interesting point that is a bit too off-topic and lengthy for this comment is that most startups simply don't realize the value of (5+)x engineers. I've worked with people that are astronomically more efficient than entry or mid-level engineers who make 100-130K, yet they make around the same amount. Its very worth it to find these people and pay them 2-3x market and retain them. I'm not talking about algorithms wizards (although these people tend to be decent algorists too), I'm speaking of engineers who can work on all levels of the stack and ship code that is simple and works. They understand business needs and don't get caught up in self-gratifying projects. They use a mix of new and old tools, selecting them for reliability and efficiency.