The 'old' guard in VC land definitely isn't in on it, I see it more as a bunch of highway robbers calling themselves VCs, making money of people that are somehow desperate.

I don't think the problem with the old guard is merely greed. Lets face it the new guard is pretty greedy too. I think the problem with the old guard is the notion that they can make money simply by virtue of their connections.

This is something that is embedded in new york finance and business culture. You make connections and get rich by introducing people to one another and taking a cut for the privilege. Thus, investment banks are not really banks in the traditional sense of the word but are more like brokers that connect investors with people that need capital.

With the internet, this model will change and is changing. It is not that hard for people to connect and one does not need to pay hefty fees to do it. So the old cliché about the internet cutting out the middleman is actually slowly happening in the world of finance after it happened in the worlds of computer sales, book sales, automobile parts, music sales, etc.

I think intermediaries will still be important but they will have to bring more to the table than merely having a fat rolodex. They will probably have to be able to do much more filtering and the like. For example, I-banks can still make a lot of money if they are able to select good investments for their investors. But lately they have not done well in that department.