I think they get bullied into larger deals that inflate their valuation beyond what they think they're worth. It works in a growing market to fundraise beyond your valuation and then grow into it. It doesn't work when the market turns down. If your runway is sufficiently short, you'll be fundraising a down round in a down economy which will slash your valuation and make it harder to get good terms.
Yea, I had this c2015 when I was seeking 250k to grow a revenue generator. I was told to make a story that compels a 15M future valuation so I could ask for 750k now. But I didn't even believe the revenue projection need to justify! I said no, these are my numbers. I couldn't fake a 10x story and my 6x story wasnt compelling enough.
