> There are plenty tech companies that are profitable, well-capitalized, have moderate organic growth, and compete with similarly sized companies.
Sure, but that just means that they and their competitors have already grown to the point where the market is saturated, and any further growth they are experiencing is because the market is growing or to the detriment to their competitors. They probably already had an exponential growth period, although it could have been short-lived if the market is small (and if the market is really small, may not have looked like exponential growth at all, and may have just looked like becoming profitable and leveling out).
You're right that not all niches will attract VC funded competitors, but I think the number niches that meet that criteria are actually very small, in this industry. There's always someone that thinks they can disrupt it somehow, or market it better to show people the market is actually much bigger than it appears. Keep in mind, the VC funded competitor doesn't have to succeed in it's task of taking over or changing the market to have extremely detrimental effects on companies that aren't working with the same paradigm.
Having a market large enough to support a few small companies but not large enough to warrant VC funded competitors that stays that way seems a rarity.