This isn't the best place for this discussion, but the short version is that you can't take the amount of capital VC's are dealing with and invest it in tiny ways because you don't have the ability to manage all of those investments. Also, VC's don't need to win most of the time to generate great returns for themselves and investors.
I had an idea about that very thing... what if there were yc-like firms in many of the notable cities/towns, and VCs funded them to fund the startups, thus outsourcing their management?
Are we really sure about this? Look at what Kiva does with microlending. Granted, the path to profitability is a lot clearer when you are buying a sewing machine or something.
I think the difference is that VCs specialize in businesses that require large amounts of capital, connections, etc., to work. Supposedly this is their forte.
