Interesting question. It might actually be ok to take money from a firm like that, if you didn't have any better alternatives. You wouldn't have the brand or connections of a top VC, but you'd at least have the money, which is not nothing.

Second-tier university endowments and pension funds, the ones trying to catch Harvard & Amherst in endowment performance. They know that if the fund performs well, they look like a genius, yet if it fails, the poor college students and retirees are left holding the bag.

The whole economy has a huge moral hazard problem. There's a reason why John Nash won a Nobel Prize.

You can't talk about VCs generally because there's such a difference between the good ones and the bad ones. The good ones serve their investors pretty well.

We'd never compete with VCs, incidentally. It's a completely different world from ours. They invest on behalf of other people (or more often, institutions). So while they have huge resources at their command, they have to answer to their investors, and this makes them excessively conservative. We much prefer using our own money, even if it limits what we can do.