I'm assuming that the theory here is that the good investors are more concerned about being in on the next Snapchat or Airbnb, and a lot less interested in bolstering downside protections that only apply if an investment is going to be one of the unproductive ones anyways.

Meanwhile, the good companies aren't going to be likely to entertain financing on anything but terms like these, so fighting them just incurs an adverse selection penalty.

The same thing seems to have happened with convertible debt, which was preceded by financing mechanisms that were way, way more onerous for entrepreneurs.