3) Private equity, big companies and venture firms bought all the small companies with good moats?

That's my bet as the single biggest reason.

There are huge piles of cash snapping up smaller firms as a business model, so anything with any visible charms gets sold. That's true whether it's a listed microcap/smallcap or private. What's left is not inspiring. Part of this is that firms that would previously have been candidates for going public are sold before that happens, meaning the new blood is missing and the ones that are there are older and have stayed small...poorer businesses.

The reason might be something else I suppose, but the effect isn't just your imagination. The average quality of small listed firms is spectacularly worse than it was in previous eras in many quantitative ways. Higher debt, lower margin, and on and on.

Jim