The only reason your comment is sort of true (not sure it actually is) is the inclusion of "as an asset class". The easily identifiable top tier firms are killing it.
Exactly. That's an application of the Pareto Principle where 80%+ of the returns are realized by 20% or fewer of the participants. Without those high-performance outliers, this whole category of investment asset class would simply no longer exist. Once those high-performance outliers regress to the mean (if they do end up doing so), the VC asset class is sunk. If the outliers remain as outliers, then either the asset class will shrink (on that note, read this interesting article on Zombie VCs: [1]) as the outliers will become the mean (the marginal and underperformers will be culled out of the market), or whatever edge they have over the mean will no longer exist. I have a feeling VC will never disappear as an asset class, which implies the former more than the latter.
and... more recently "New data suggests the decline has been more severe than previously thought, finding fewer than 100 active U.S. VC firms in the technology sector.":
1) There will always be high performance outliers in venture capital, it's the nature of the business, and as such the VC asset class will never actually sink. It'll continue to perpetually boom and bust. It's a 70 year old industry that serves a valuable function, it's not going anywhere.
2) Whether the VC market is crawling along or zooming is dependent on both the economy and the Fed's monetary policy. When money is cheap and easy to come by, it chases higher risk investments. If you can't earn 1% on your dollars, you're more likely to push that capital into riskier investments seeking yield.
I think you confuse revenue and income. You can have positive / non-zero revenue with massive negative income. Indeed, that's the problem here - $1M in revenue with huge losses (negative income).
SO... the problem is not the revenue. It's the income.
