VC-istan is the perfect descriptor for that ecosystem. "VC-funded world" is too many syllables, "VC-land" sounds like a theme park, and Silicon Valley is a geographical location more than an economic sector. Nothing works as well as "VC-istan".
I'd ask you to stop using this phrase but it seems you're attached to it (for no good reason).
People find "VC-istan" pejorative because they're all aware of (as you put it well) "the terrible, backward, self-serving state of things."
I've heard people read into the term, as a comment on VC-istan as somewhat like a feudal, ex-Soviet state. That works, but it wasn't what I intended. I was just using "stan", originally, to describe something in few syllables.