Capital aggregation isn't the only role of the bank but it is an essential one. And certainly groups of people can provide that same service, at some point though it might seem simpler to simply be a bank[1] :-) but putting that aside it is almost exactly the VC model.

[1] I know that sounds ridiculous, because being a bank is anything but simple, but back in the 90's I watched some investment "clubs" become large enough to attract the attention of the SEC which then required a bunch of legal work and various other financial regulation compliance issues until it seemed like they had morphed into banks.

Chuck as I'm sure you know, VC is just a subset of the larger world of private equity in general.

What I'm wondering is why PE has traditionally been practiced only by high-net worth households/institutions. I wonder what it would take to get a $50k neighborhood investment club together. My father told me his father used to do this with a few friends back in Illinois in the 50s and 60s, but it seems less common now, maybe because more people have brokerage accounts and commissions are lower? Hard to say. But I don't like how "professionalized" investment has become, there's so much more to it than that, and I know for sure there's lots of small-town restaurant/grocery store/real estate deals happening that are small-scale and organized by a few friends.

   > why PE has traditionally been practiced only by 
   > high-net worth households/institutions. 

Short answer to your question is liability. If you can meet the requirements of "qualified investor" then the club has no liability if you lose all your money. They can say "Hey, before you invest you should know you might lose all your money." and you say "Ok, here is $1,000". If you lose all their money, even if you did stupid things with it, they are unable to sue you to recover it[1]. Recent changes have made is possible for non-qualified investors to participate but the rule making on that is incomplete (much to the irritation of places like WeFunder no doubt).

So your Father might not do this with his friends, if they were not qualified investors and he was, because if the friends lost money they might choose to sue your Father to cover their losses and they would have a decent shot of winning that case. At the very least it would cost your father a lot of time and energy and probably wipe out any gains at all the project came up with, or worse amplify any losses.

So to put together your $50k neighborhood investment club is simple if your tolerance for risk is high, and harder if you don't want to be sued by the other members. A simple partnership can often work (liability is spread around to everyone) but consult competent legal counsel before proceeding. Investing in real estate and then structuring it as a landlord deal gives you a level of protection between the investment group and the tenants, that can be handy if you get bad tenants.

[1] Caveat that anyone can sue anyone, and there are gross negligence issues that have carve outs, but generally it shields the partnership from liability.