Lilly, who led his firm's investments in Instagram, Dropbox and Tumblr, said his cell phone service is often faster in the London subway than the Internet service at his house in California.
"We obviously have real improvements that we need to make and real investments we need to make in infrastructure," he said. "It's a big problem. It will take money."
Diversity in Silicon Valley
Lilly also weighed in on diversity in Silicon Valley. On Wednesday, Google released data that showed its workforce is largely white and male. Just 2 percent of its employees are black, 3 percent are Hispanic and 3 percent are women.
Although he said, "we don't have enough women leaders that are visible," he applauded Google for its disclosure.
The Internet search giant said in a statement Wednesday, "Google is not where we want to be when it comes to diversity, and it's hard to address these kinds of challenges if you're not prepared to discuss them openly, and with facts."
Read MoreWhite and male, Google releases diversity data
Technology fields have "historically been more male and more white," Lilly said. "I think that can change over time, and I already see it happening."
However, he added, "It's not changing fast enough but Google's disclosure will help that."