Back in 2007, I wrote about “the bubble pattern,” which was a sort of not particularly insightful observation that assets that perform well generate demand that outstrips supply, which in turn leads to a massive reduction in the quality of assets in that class.

Last week, Felix Salmon turned up a report from the Kauffman Foundation that documented the failings of the venture capital industry. Here’s his conclusion:

The big picture, here, is that an enormous number of institutional investors are still chasing VC returns which haven’t really existed in the industry since the mid-90s. So long as all that money is chasing a relatively small number of opportunities, and especially now that valuations for early-stage tech companies are going through the roof, the chances that the average LP will make any money at all in VC are slim indeed.

This is exactly what I was talking about back in 2007. I’ve worked at a number of venture-backed companies over the years, and I’m very glad for the opportunities that venture capital has provided, but that doesn’t mean investing in a venture capital fund is a great investment.