Back during the boom years, newly minted MBAs seemed to believe that the only way to start a company was to take their cocktail napkin scribble to a VC and get startup cash. The VCs didn't mind getting in early. They claimed their connections and know-how were necessary, but a bit of ancedotal evidence and some research suggests entrepreneurs are realizing that's not the way it needs to be done. In all honesty, it's always been the case that most startups are not right for venture capital -- but even those who will need it eventually can do quite well for themselves by bootstrapping. The recent sales of Topix and Bloglines are two cases in Silicon Valley where seasoned founders (who know both the upsides and downsides to VC funding) bootstrapped companies, passed on the VC money and sold their companies instead. The deals appear to give the start-ups access to capital to grow their businesses, some upfront payout for their hard work and continued control over the business. Going the acquisition route as opposed to taking funding and shooting for an IPO may have limited the upside of the founders, but the entrepreneurs are still making out well. VCs may discover that they need to rethink the "value proposition" they offer to a new generation of hot startups that seem more skeptical of the typical VC route.
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