Although you wouldn’t know it from all the good-natured laughter and noise, on Saturday night, at least 25% of the room is now unemployed. Some are journalists who have been laid off from their newpapers or magazines. Others were technology officers of companies that have expired in the current red tide. A pretty fair number were entrepreneurs who have been crunched by the temporary fall of venture capitalism.

Which brings me to a conclusion I’ve reached in this post MySpace, post YouTube, pre-Facebook and Twitter transactional universe. Forget the occasional Ponzi scheme. Venture capitalism may be the greatest scam going.

Not long ago I asked an investment banking friend of mine how many VC deals he knew of in the tech sector over the last ten years or so. A thousand, he said. And how many are still around and doing business? I inquired. Three? he replied. This may be just Darwin at work. But I don’t think so. It’s something baked into the DNA of the venture capitalism game. Look at the model:

• I have money, which I give to you to pursue your little idea.
• You develop your idea to the point where it can be sold to somebody who has none.
• During that time, I can do whatever I want with you to grow your bulb into a tulip I can sell.
• I then sell your pretty flower, take all my money back and then some. The guys who grew the thing get a little taste, but are for the most part left holding the bag.
• The tiny, wafer-thin notion wilts inside the big hothouse that acquired it, generating the requirement for a massive write-down.
• I’m still rich even though nobody else involved in this is.

This brings me to Matt, my pal who threw the party. He’s an entrepreneur. His business partner was there, too. They’re both unemployed. They had a very good little business going for a while, though. Something about brokering space to companies that require it. Whatever. Classic tasty concept. VCs came along. Snapped them up. They were rich for a while, on paper. But they had to work and couldn’t really monetize their supposed “wealth.”

After a while, of course, the inevitable happened. The VCs sold their company to a nice corporation that wanted to pair what they do with some software applications that they had also just acquired. Their VC walked away with the money. My friend stayed on. It was, in his mind at least, still his baby.

“The problem was that the software they made us use wasn’t scaleable,” he told me sadly over his sixteenth beer. To be fair, there was that pound of paella we each consumed to soak it up. “We had to use it… but it wasn’t… scaleable,” he repeatedly sadly. “And the whole thing  just… stopped working. Ah, well.”

I don’t have to tell you the only one who walked away with all the dough from that sad story. Whatever its current difficulties, let it never be said that capitalism is bad business for the guys holding the checkbook.