Once upon a time, VCs raised big funds and wrote big cheques. They talked about putting "money to work", and looked to put $5M - $10M into every company they backed. While some funds were successful with this "go big or go home" strategy, the industry as a whole was not.
Today's software startup does not need $5M to get going. 1/10 of that is more the case. In response to this development we are seeing new breeds of investors from angels to super angels, micro VCs, etc. These new style investment funds write lots of small cheques, backing many more companies than traditional venture funds.
One of the benefits of the "old" strategy was that, for better or worse, you had committed investors. They each owned big chunks of your company and had lots of capital invested in you. So, whether you wanted it or not, you had their attention.
To be clear, I think the super angel / micro VC phenomenon is great. I think it gives entrepreneurs more choice and plugs them into investors with huge networks and data points because of all the deals they do. And I think it's great for Limited Partners (the folks that give super angels their capital), because the super angels are building a well diversified portfolio with exposure to many companies, sectors, and in some cases geographies.
But, what happens when things go wrong? What if you run out of cash before getting enough milestones to truly be ready to raise more capital? What if you need more time because you want to pivot in a new, exciting direction? What if you need to replace a key team member? The examples are endless.
When you had a small number of highly committed investors, it ws easier to convince them to continue to back you. After all, they are already "all in". A few pennies more on top of that investment could give you the bridge you need. But how easy is it to convince investors who have 60, 80 or more other companies to spend the time needed to understand your new direction and back it? How much effort is required to get a large syndicate of many, disparate investors to re-up and bridge you?
If you were building a shopping mall, your first priority would be to secure an anchor tenant: a big brand that takes a big chunk of space and acts as a draw for shoppers and other merchants. You can't build a mall without this. I think funding syndicates should follow a similar strategy. By all means, get angels, use Angel list, get super angels on board. But, I get a lead investor who takes a big chunk of the round and has the capital, brand and relationships to keep your syndicate together in good times and bad. Without that, you create a lot of exposure and set yourself up for a lot of work getting the group to come together if and when you need them again.