VC money for a nonprofit open-source commerce-facilitation project makes no sense to me. Where there is no revenue model, and all the organization's infrastructure can simply be forked and federated, a business formed to serve an ideology will not benefit from the positive feedback of market incentives. At least SN follows the Craigslist/television/newspaper/twitter/fb model of success, give-away the network-effect component, and sell marketing to companies wanting to piggyback on the service (jobs/ads). In this case the VC only prolongs the pain for the "guy with an idea" and misallocates social and human capital to people with technical know-how but no understanding of the other business activities required to bring a product to market. OB1 may have had a relatively successful technical development effort, but the necessary activities for precursors to product development and supporting activities of market research, market feedback, market realignment appear to have been short-circuited by angel-money and groupthink.

I see an abundance of VC money as direct result of credit expansion. So the result is quite similar.