This post is quite off the mark as there are some massive leaps of faith/logic in this post which I'll try to address. For context, my firm (CB Insights) tracks this data so I'm not flying blind here (at least not completely)

Quote: The solution to this structural problem in the startup economy is simple: we need more venture funds. Unfortunately, thousands of funds around the world have been killed off since 2007.

This is really not accurate or realistic. Many venture funds have died for a reason - their returns were terrible. In short, they deserved to die because they didn't perform. The Limited Partners in those funds decided not to invest more in those funds, and as a result those funds are no more. This is a good thing as its the way markets and resource allocation are supposed to work (albeit the market is imperfect but that's a rant for another day). If anyone can name a fund with an above benchmark IRR that was "killed", I will stand corrected.

The one negative of these crappy returning funds is is that some of those LPs may have soured on the VC asset class overall and so might be gunshy to invest in another VC fund. That's perhaps happened but nevertheless, the idea that funds were "killed off" is inaccurate. They were given some rope and hung themselves with poor returns.

Quote: First, you have a large number of high-quality companies that need capital, while the competition to provide capital is decreasing. Second, you have a pool of frustrated limited partners looking for new managers.

Capital will find its way to great opportunities. And that capital may not always come from VCs. We track hedge funds investing in private companies through sidepocket funds, family offices investing their money in these companies, angels, corporates, etc. If there is a good opportunity, someone will invest especially now when it seems everyone wants to invest in the next FB, Twitter, Groupon, Zynga, etc.

The problem is that "high quality" as a descriptor means nothing. Great companies whose metrics are killer, whose growth is up and to the right and who are in the right space (mobile photo sharing app anyone?) will get their Series A. It's the folks who are kinda up and kinda down that have trouble. Are these high quality companies? Who knows? They might be good companies one day but maybe the odds of them generating venture level returns is now not realistic. And so they're orphaned and they'll die. That sounds terrible but there is a VC conversion funnel and has been forever. Not everyone gets follow-on funding. It's the rules.

Just 1 in 100 angel deals may get funded by venture capitalists today, yet there are probably at least 10 strong startups in a 100, if not more.

As commenter staunch says, "Citation Needed". There is no support for this beyond a gut feel.

Finally, here is the reality on Seed VC deals. If done by a large VC, they are "call options". If the company kills it with that money, the VC has the first look at them and can invest in the Series A. If they don't grow like heck, it's just a seed investment so not lots of capital at risk.

Totally unrelated but since this response was longer than expected, I'm gonna sneak this in -- we're hiring so check us out - www.cbinsights.com