The problem is that VCs don't really compete with each other at all. They co-fund a lot of deals and it's more important to them, in the long term, that they "g

The problem is that VCs don't really compete with each other at all. They co-fund a lot of deals and it's more important to them, in the long term, that they "get in on" the few blockbuster deals that exist every year, than it is that they make the best investments. So they're not going to piss off another VC who might have access to good deals. The result is that they end up colluding more than they compete, and the result is that entrepreneurs don't get fair terms, but terms set by a VC in-crowd. They also compare notes on who they like and who they don't, and if you turn down a term sheet you're likely to have that VC pick up a phone and dry up interest in other VC firms that are supposed to be his competitors.