It does have a relationship to wealth inequality. On the one hand you have money seeking returns and getting caught up in zero and negative sum games while doing so. On the other you have a lack of small investors with lower risk tolerance. Both of these are results of wealth inequality.
> On the one hand you have money seeking returns and getting caught up in zero and negative sum games while doing so.
This happens to retail investors all the time.
> On the other you have a lack of small investors with lower risk tolerance. Both of these are results of wealth inequality.
Citation needed. Retail investors buy all kinds of risky shit. You can do all of these same things with retail investors money. You don't need any wealth inequality whatsoever to explain venture capital.
Are you referring to investors in penny stocks? I was thinking more in terms of seed investors and self-funding entrepreneurs; of which there is a real dearth at present.
No. You are right that non-wealthy people do not make angel investments in startups (usually). However, they could make a small investment in a fund that does so. Right now, such funds do not exist, primarily for regulatory reasons.
