I have to disagree with your 'Billion dollar companies make bubbles' assesment. Multi-billion dollar markets make bubbles, and the size of the start-up market is probably as large if not larger in dollars than it was in 1999, now it is just made of 10-100x more companies, so the total valuation of the tech market could be the same as 1999, but that doesn't absolutely have to be funded by VCs.
1000 smaller investors loosing their small investments has the same effect as 1 VC loosing their large investment, doesn't it?
Think about the housing crisis, that was a bubble where hundreds of thousands of people over-financed by a small amount, and then couldn't pay back the creditors.
Bubble's are valuation errors in order of magnitude off. I don't think 10's valued at 100s could make a bubble, or at least one that is dangerous. Unless you are talking real estate. The reason is that smaller companies don't float enough paper to be broadly owned/distributed throughout the system. The characteristics of a bubble typicaly indicate feedback loops operating at scale. A portfolio of smaller companies is a less dangerous situation. This is why, if we look at a bubble in "angel" deals, its not the same thing as the 2000 era bubble that was in public equities.
1000 smaller investors loosing their small investments has the same effect as 1 VC loosing their large investment, doesn't it?
Think about the housing crisis, that was a bubble where hundreds of thousands of people over-financed by a small amount, and then couldn't pay back the creditors.