Early funding is a very small part of the overall pool of capital available. If every seed round is $2.5 million, 10,000 seed deals (~100X YC's size) is $25 billion in capital spent.
For context:
- It's less than ten percent of Google's market cap ($490 billion) [0]
- The average Series D or later round is 40x higher ($100 million) [1]
- It's less than a tenth of a percent of the US bond market ($40 trillion.) [2]
Net - seed funding is just not a lot of money compared to the market at large. If founders and VCs have money, they can spend it. It gets very different later on.