If this were a viable model, I'd have to assume someone would be doing it. How would a VC even go about chasing ... everything but the fat tail? How would the VCs get a return if they did figure that out? 30$ million self sustaining businesses don't pay dividends, don't raise more money (unless they want to unicorn), and don't exit.
I believe the comment was saying it'd be better for everyone else, not that it'd be a viable model for VCs.
> Perhaps better for everyone (but the VCs)
In an abstract way this makes some sense - more competition, more niche & targeted companies to suit more needs, and an income distribution that's much flatter (naturally) across the board. In the real world, it only takes one person (e.g. Bezos) aiming for something bigger to keep this model from ever thriving.
Rocket Internet more or less are doing it with ecommerce. Look them up. They've got presences almost everywhere and probably are the parent company of one or two "hot new ecommerce sites" in your city. Large marketing budgets are required, though. I believe a lot of their operations are loss-making for several years, initially.
