It's all in the letter
An angel investor friend of mine told me recently that he has heard of several angel deals in Boston where a VC coming into the deal after the angel rounds had been done had required that the VC round be labeled Series A, the typical designation for the first investment in a company, and that the angel rounds be re-labeled starting with Series B. No other economic changes happened. It was purely a name change.
Why would a VC worry about this? It has to be because they are worried about marketing to their investors, to other entrepreneurs, or perhaps to themselves. Many firms that have built their reputation on being 'Series A' investors (the first money into a company) have now moved to being later stage investors so they can put more money to work faster. With larger funds to invest, it has become more difficult for some firms to justify doing early stage deals. But, they still want to position themselves as such with their investors and other entrepreneurs. Being a 'Series A' investor is a point of pride. So, I guess that VCs are now writing some revisionist history so they can still claim to have invested in Series A.
I think that this is kind of crazy. LPs won't be fooled because in the end all they care about is how much money goes into an investment and how much more comes out. If someone else invested first and lowered the risk, fine. Maybe it is marketing to other entrepreneurs that is what these VCs are worried about. If word gets out that they don't do real Series A deals, entrepreneurs will go elsewhere with their deals. That hurts VCs in the long term. But, just changing the letters around won't solve this problem. They are only fooling themselves.