Everything you've said so far has been pretty spot on, however the Bain report says the average fund IRR does outperform the market: https://www.bain.com/globalassets/noindex/2025/bain-report_g...

IRR comparisons admittedly get a little fuzzy since the lack of liquidity and pegging values is difficult.

You're also correct to say that VC is a subset of PE, technically speaking, colloquially it's not really. If you put VC into the whole mix, then yes the asset class sucks versus the public market. PE is often synonymous with an MBO.