I think you just hit on part of why they weren't attracting VC money the last decade of easy capital in your second sentence. VCs were afraid of spreading thems

I think you just hit on part of why they weren't attracting VC money the last decade of easy capital in your second sentence. VCs were afraid of spreading themselves out so they just continued investing in NYC/SF. If the mantra is "don't spread your investments out geographically" and you're already heavily invested in an area, how do people not from that area attract your money? Now that the traditional startup hotspots are over saturated with investors, those who can't set the best terms for themselves in those areas are finally realizing they can likely get better terms in places that aren't currently competing as heavily for VC money.