I see it a little differently. There are only so many viable opportunities available at any given time to invest in. Even if you believe the number of good opportunities is limitless, number of capable people who can act on them isn't. As the amount of money chasing deals goes up the competition for good deals goes up and VC suffer because they end up with worse terms. Many stupid deals also get funded. Both of these are bad for the VC industry, both are bad for their limited partners (including our pension funds) both are probably good for entrepreneurs.