This should trigger alarm bells in all would-be startup founders. These sorts of patterns should have founders debating about doing things like Bryce Roberts' indie.vc experiment.
I think given this environment (the barbell shape of current day funding) the next financier who wants to make a big impact should fix this middle part of funding. I'd wager right now companies are dying in the series B land that shouldn't be, which means probable opportunity. (YC seems to have fixed early stage financing, so maybe some vc could be innovative enough to have YC level clout in series A land? Maybe it'd cost too much money to pull it off?)
1. Early stage funding is much easier to acquire than it used to be. This means there are more companies looking for A rounds after a seed stage than there ever have been. At this point, everyone thinks they're a big shot and very few people actually are, so their feelings get hurt when there's lukewarm VC interest in an A round.
2. The smart money has moved from B rounds to C rounds because there's too much noise in the early rounds. By C rounds you know more about the company's chances of success because you need meaningful revenue and a viable business model to raise C round money, but investing in a B round you often don't know an awful lot more than you did about the long-term viability of a company than you did at seed stage.
3. Companies are failing faster as a result of 1 and 2, which reinforces the perception that the smart money is moving out of B rounds.
I don't think that having more companies fail at A or B rounds is a bad thing; but the VC market is increasingly focused on the unicorns that will have a $10B IPO in 10 years. There are only so many of those that the economy at large can support. And I don't think that there will be a "Like YC, but for A rounds" because the sums of money we're talking are several orders of magnitude bigger. Seed companies need training in how the business world works, how not to get taken advantage of, how to build a model that scales, developing a plan, etc. The money is somewhat secondary in a seed round. Companies raising an A round might need a little bit of guidance and support in fine-tuning their plan, but mostly they need money to hire people and execute on their plan. If you're raising a B round, you just need money. YC solved the problem for seed rounds by just hiring people who know these things and sharing them among a bunch of companies.
And I wouldn't say that YC has single-handedly solved the early stage funding problem. They simply don't have that scale -- nobody does. They have somewhat indirectly solved it by showing the world a model for operating a sustainable startup accelerator that others have copied; and they are hugely influential, but I don't think any one organization can solve a problem like this. It's too much.
http://bryce.vc/post/116925485725/drafting-a-declaration-of-...
I think given this environment (the barbell shape of current day funding) the next financier who wants to make a big impact should fix this middle part of funding. I'd wager right now companies are dying in the series B land that shouldn't be, which means probable opportunity. (YC seems to have fixed early stage financing, so maybe some vc could be innovative enough to have YC level clout in series A land? Maybe it'd cost too much money to pull it off?)