This weekend Brightroll CEO Tod Sacerdoti wrote that his fundraising efforts revealed VCs are afraid of entrepreneurs “Pulling a Patzer”—that is, selling the company too early for investor tastes, as many think Mint.com CEO Aaron Patzer did when he dished the company of to Intuit for $170 million to Intuit.

That exit was a life-changing event for Patzer, but the later-stage investors, especially those who participated in the last $14 million round that came a mere four weeks before the exit, it was almost certainly a lousy return.

Of course, VCs would never come out and complain publicly about the sale, lest they be perceived as at odds with the interest of entrepreneurs, but when interviewing for potential new investments (like Brightroll), they need to gauge whether their entrepreneurs might leave money on the table.

To be fair, the Patzer problem is real—and Patzer helped create it. He told us shortly after the sale that his last investment round was, in part, a negotiating tactic used to up Intuit’s offer by demonstrating its alternatives. Yes, the later stage guys feel pwned, and they were the victims, in some sense, of a very savvy entrepreneur. But such is life—much more often it’s the entrepreneurs that get kicked out of their companies or end up with a smaller payday because of the VCs.

Rob Hayes, an early investor in Mint (who did quite well with the exit because his firm provided the first $325k of outside capital) took the opportunity to make an important point.

For the record, the Mint.com exit was profoundly successful for us. If we are doing things right and our company founders are successful, then over the long run we should be successful. If we get to the point where our founders are successful but we can't be, we should be rethinking our business.

Exactly. The VC model is broken, and early-stage angels are in a much better position to take advantage of the decreasing cost of innovation for web-based startups. This is why early-stage “spray and pray” investment firms are cropping up. The original sprayer was Ron Conway, who has notoriously done well with his personal portfolio of hundreds of angel investments. Ron is now raising a $10 million fund. RightSide Capital Management is a new entrant that hopes to automate the spray approach even further. The partners plan to provide seed capital to 100 to 200 companies year, have no face-to-face meetings with entrepreneurs, and use algorithms to provide decisions on an investment within two weeks of application.

The math here is simple. Cloud computing means that web-based companies need almost zero physical infrastructure to get off the ground. Entrepreneurs need less money to be successful on average, and their life-changing exits can come sooner, and for smaller valuations. There can also be a lot more of them, and they don’t have to live in Silicon Valley. Hence, the Patzer solution: VCs should simply not fund as many internet plays. Leave that to the angels, and go focus on greentech, healthcare, and education—sectors where new technologies really do need big money to get over the hump to commercialization.