Several of my best investments have been from startups raising less than $500k. Justin.tv/Twitch returned 97x my original investment, and Weebly will likely be even more.
Do you think the climate has changed since then to make it much harder?
An example would be that the founding team isn't skilled enough to get through the product market fit stage, so they hire in order to fill those gaps. Or maybe it's a chicken & egg problem, which often requires lots of time and luck to crack.
With the high salary requirements that engineers and designers have today, especially in Silicon Valley, this means burn-rates get very high very fast, even with only a few employees.
I remember five years ago in most cases you'd take a major salary cut (which was made up for in equity) when joining a startup as a first hire. You took a big risk to be employee number one or two. These days the landscape is so competitive you not only get equity, but a great salary as well.
I wonder if this has something to do with what you're hinting at?
I have never get investment (rarely in my country) but always thinking that I prefer a small push than a huge one.
The key is to stay very lean until you have definite product/market fit and can raise a huge growth round.
-David