True. You can fundamentally view the relationship between a startup's progress and its wont to fund as occurring against a constantly shifting risk/reward ratio

True. You can fundamentally view the relationship between a startup's progress and its wont to fund as occurring against a constantly shifting risk/reward ratio for the VC. If the startup can say "look, we have product A with feature set B", that's something. If they can say "look, we also have X customers and Y growth with Z profitability", that's something more. It is perfectly reasonable for startups, seeing that the risk/reward graph shifts significantly at certain achievements, to schedule funding rounds in such a way as to minimize that risk for investors and thus retain maximum ownership. For example, in our case (a hardware startup with four digit unit prices per product) we are naturally deferring Series A until we have achieved a final manufacturing-ready prototype, both because we need serious cash to make production happen at decent volume, and because anything earlier would be suicidal from the perspective of long term value due to far higher VC-perceived risk.