Loyalty to their buddies only brings the VCs profit in the long term if their buddies are good, which is exactly the point of webwright's that underwater is trying to contradict.

That boils down to the efficient markets claim. Unfortunately we've seen a lot of counterexamples for that. As just one popular example, Wall Street - the people that, among others, underwrite tech IPOs that go on to pop 50% and 100% - is profitable in the long term for people in the front office, and buddy-based for people in the front office. Would you say most people's buddies there are "good"?