There are massive problems that come with "scale" - problems most people don't want. The VC model is all about the exit, whereas, again, 90-something-% of businesses, trades included, are focused on long-term sustainability, not on the "exit".
Sure, the VC space us very visible, very "loud", gets a lot of press, and so on. And of course 100% of non-vc owners don't get to be billionaires, but to VC world is a tiny sliver of the software world.
Even living outside of SV I don’t see a lot of in between firms.
I'm in a space that doesn't remotely interest VCs, it's not a regulated industry, and we're not a consulting company. Actually we're in 3 such spaces.
I also teach other (working) developers and while some are in health care the vast majority are unregulated.
But to be fair, you've likely never heard of us, or our ilk. We do the boring office software that underpins every boring industry. We're not self-driving cars or exoskeletons, we're data in, data processing, data out.
Our market isn't sexy enough, or wide enough for VCs, we don't need millions of $ anyway, so we've never bothered to ask for it. We do boring things like make a profit, and fund growth out of cash-flow. We hire slowly, and we don't do layoffs.
We have lots of competitors just like us.
There are many boutique SaaS firms - but if you only have a few customers, the business looks more like an outsourced internal team then an independent concern.
happy to be proven wrong on this point, would give me some ideas for my career :)