A VC

So, I think this is going to be generally true of all small company alternative finance:

I'm optimistic that it will happen. In an open and free market, capital will flow to the places where it can earn an appropriate return. I suspect we'll see some of the large public pension funds who have been drawn to venture capital over the past decade decide to leave the asset class because it does not scale to the levels they need to efficiently invest capital. That will leave the asset class to family offices, endowments, and other smaller institutions who made up the largest part of the asset class in the 1980s and early 1990s.A VC, Apr 2009

Basically, the outsized returns for VC were followed by more and more capital until such point as they hit the returns from the general market. (Basically the marginal returns for another dollar invested converged.) This interesting thing about Fred's math here is that he derives the number top-down from the returns possible and the total size of the universe of possible exits, net of fees. 

Arguably every investment market has a similar point of diminishing marginal returns. The barriers presented by the qualified investor requirement might skew this number a little, but I bet the fees use that up.

Fred is a smart guy.