Do it for less...
I've written a lot over the last few days about the issues of too much money going into a company so its only fair to highlight the other side of the equation... do it for less.
The NY Times has an article today (no subscription required this week only) about web companies that have been started on less money - in some cases a few thousand dollars. One of the examples quoted is Meebo, the web based IM company in Palo Alto.
Meebo eventually took venture money but only after they had established a few proof points for the business - they proved out the technology and validated that they could acquire and retain users. Now they are widening their footprint and I'm sure, thinking about ways to monetize their user base.
The point is that the capital required to get an Internet company up and running these days can be modest. Cheap hardware, cheaper bandwidth and high quality open source software have made a huge impact. The flip side is that the barriers to entry for competitors may be non-existent or very low. It's hard to think of other business areas that are as inexpensive to enter as the Internet primarily because the Internet enables low cost distribution and low customer acquisition cost (for those ideas that simply click! with users).
The same NYT article also has a long thread about the mismatch between early stage investing and large venture funds - but as I said before, it's not just about the money, it's about the help. A smaller fund lets the venture investor spend more time with the company and make smaller upfront investments to prove out the business.