The venture capital industry was built on the premise that both capital and high quality companies are scarce. For most of the history of the industry, this has been true. I remember sitting at demo day in 2011 and marveling at the fact that the combined capital of all the VCs in the room was less than that controlled by the hedge fund at which I had worked. But the model is wrong. Venture capital is abundant, and that fact should fundamentally change how founders fundraise.
This scarcity model has shaped the structure of startups and VCs - most of what an early stage startup does is designed to convince a VC to invest. Companies treat VCs as a limited resource that is both hard to access and hard to convince. Investors do their best to perpetuate this idea because it allows them to retain control of the pitch and fund dynamic.
Something interesting happens, though, whenever a company has a signifier of quality - a YC demo day slot, a high quality angel, pedigreed founders, or, even better, strong growth. In these cases, there are investor feeding frenzies, leading to oversubscribed rounds, ever climbing prices, and investors willing to accept ownership targets they - until recently - would have termed unacceptable.