I've been part of startups where VCs would stop by to pat on the CEO on the back, take a little tour of the office, happy to see 15-ish bozos banging on the keyboard. Sometimes they would invite some of their buddies to show off their monkeys. I don't know, maybe it was the VC version of a dick fight.
A reductive narrative: a lot of investors like to pattern-match, and SV is full of many more success stories of a small tight-knit team collaborating well in a tiny shared garage office than it is of teams who managed to create a functioning collaborative distributed workflow.
(In our case, we've managed to sidestep this so far by working with smart angels who get it, and by working in a space — indie games — where distributed teams are comparatively common. Also helps that my cofounder is in SF and can take in-person meetings. I do worry we'll feel pressure at the A round to consolidate, but I'll be pushing hard against it.)
I actually ran into the CEO a year after this happened and he still believed it to be true. "There's no way we would've been able to pull off our last pivot without everyone sitting around the table late at night spitting out ideas".
Oh well. I'm at a better company now.