We recommend that entrepreneurs keep the funding amounts small in the early rounds when the valuations are lower and then scale up the amounts in the later rounds when it is a lot more clear how money can create value and when the valuations will be higher. This model has worked out pretty well. David Karp raised $600k, then $4mm, then 5mm, then $25mm, then $80mm (or something like that). And at the time of the sale to Yahoo!, he owned a very nice stake in the business even though he had raised well north of $100mm. He did that by keeping his rounds small in the early days and only scaling them when he had to and the valuations offered were much higher.
The point of all this is, raising a boatload of money too early at an artificially high valuation puts the entrepreneur under a lot of pressure to up the valuation even higher to raise the next round. Doing small rounds at smaller valuations is not a bad thing, especially since raising less money forces entrepreneurs to become more disciplined about how they spend the money.