Kleiner Perkins' first fund was $8M -- less than most companies raise today

When Kleiner Perkins was raising its first fund, it was not an established brand and the idea of venture capital was still very new. I suspect KPCB would have liked to raise more.

But even if you adjust it for inflation, it's still under $50M for a VC fund...

Wrong context. The amount of money raised is a function of how much money is chasing that particular kind of deal. A better context is the current cost of doing business. The inflation adjusted costs of computers, licensing, and marketing are all down. Therefore startups need less funding, not more.

People forget that there is a cost to receiving too much funding, which is that you now need a success that justifies the money spent. Which means that if you spot a viable opportunity which is smaller than that target, you can't explore it. Even though in other circumstances it could have been perfectly appropriate for that company.

For an interesting book that covers the dynamics of how over-funding kills success, I highly recommend The Innovator's Solution. It is a follow-up to The Innovator's Dilemma, but the discussion of how money distorts organizational dynamics is only in the sequel.