- Larger VC funds make Series A financings harder to do.
- The growth in angels and incubators.
- Poor investment decisions made by angels and seed investors.
I would add to this list another bullet point: valuations. Many VCs I speak with say that angel/seed rounds have valuation inflation, which makes it much harder for an institutional VC to do a deal at the Series A stage. If the valuation is too high, then (1) the company (and its angel and seed investors) have to take a haircut on valuation (and suffer dilution as a result), (2) the VC has to pay a higher valuation, or (3) the deal doesn't get done.
The article goes on to discuss whether equity crowdfunding can fill the Series A gap, and argues that no, equity crowdfunding will not do this.
It's an interesting article and worth a read. Here's the link: