When “venture”* capitalists raise larger and larger funds, they write larger and larger checks. At its simplest, “venture” firms have a limited number of partners and cannot possibly deploy large funds with $5M checks. Thus “venture” firms keep the number of deals flat but increase check size… lest they take on more partners.
This has created a swelling of private market valuations in the later stages of “startup”* lifecycles. Larger investor checks = larger valuations = larger desire for growth = subsidized products and services for market share = miserable/unsustainable unit economics. And nothing demonstrates this better than the last-mile, on-demand delivery market.
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