You can think of the startup ecosystem as a food chain, with different species fulfilling different ecological niches. Angel Investors feed on tiny early-stage deals, while VCs gobble up bigger deals. Private equity, corporate buyers, and the public markets make up the higher reaches of the chain.

What we’re going through now is the equivalent of a diatom bloom; conditions are perfect to allow a thousand startups to spring up. But a diatom bloom has a dark side; an imbalance in the ecosystem can cause problems further up the chain.