Can somebody explain to me why every startup company(or at least every one that articles are written about) feels the need to raise as much VC as possible ASAP? There are so many options for developing scalable systems relatively easily and the cost of running an entirely web/software based company(read: 90% of the hot startups) today is comically low, especially with pay what you use PaaS/IaaS systems like those offered by Google and Amazon. If your product crashes and burns, you will be out a couple thousand dollars MAX + whatever time and effort you put in. If your product is successful, by the time running it on one of these platforms gets too expensive to pay for out of pocket(meaning you have a lot of users running up bandwidth/infrastructure costs), I'd guess that VC firms would be coming to you rather than you to them, and you would basically have more authority to dictate investment terms, and wouldn't have to slog around pitching to firm after firm - most of who will probably reject early stage investment in anything that isn't some rehashed social media dreck made by the white boys from Stanford. I've never pitched to a VC firm, but I don't believe that any pitch is better than "Hey my thing has 10,000 fucking users and we get a metric shitton of new signups every day". I don't think they would care if you were a hobo clown from Latvia who dropped out of elementary school if your product had users and pull, they'd throw money at you since they all want to jump in on the next big thing.
This confuses me as it would seem to be a counter trend to what I'd expect based on what stuff was like a few years ago, when infrastructure costs were much higher, there were much less options, and development was more difficult. Google and Facebook - both of which are practically the model now for successful web companies - were fairly bootstrapped(run out of garages and dorm rooms by a few friends who had scraped together money from friends and family) before getting VC funding, which they got after their products had received somewhat widespread hype/adoption. I don't even think it would have been difficult to raise money or make VC connections before the product even launched for these people, they were practically the definition of the white boys from Stanford - but they didn't. The founders of both of those companies still retain massive shares and control in them compared to what you would expect from almost any other type of company of their calibre. Neither of them had to resort to advertising before their companies got big. The excuse that seems to be given is that by getting VC you don't have to worry about profits and paying costs for a while and you can just focus purely on the product, but as I said before, the costs are minimal - if you had even a small amount of savings or hit a family member up for a loan, you could run for quite a while on Google App Engine and such and not really have to worry about cost. If your founders are even remotely technical, I don't see how you would need more staff members in your early stages, successful web/software companies love to brag about how early on their team consisted of 3 people who worked a million hours a week on the product subsisting on nothing but cocaine and melon rinds because they were so dedicated to the company. As a person who I guess would be considered technical(though if you ask me I'm just a monkey who doesn't have a clue what they are doing and just bangs rocks together and hacks at stuff till something working comes out), I simply don't see the appeal of begging a bunch of of suits - most of whom probably don't know a shit about computers - for venture funding, and having to sell large stakes of your company to get it when you don't absolutely need it at the time.
The only reason I would postulate for this trend is an increasing amount of non-technical founders who need to pay for developers to make and maintain their product, but don't want to give these developers significant equity in the company. Almost all of the cofounders of Google and Facebook were highly technical and very driven and intelligent from what I can see, so I could easily believe that they were able to chug along on their own for a while without hiring more technical staff. I've put a couple of fairly popular and highly trafficked web projects(nothing huge, current one pushes about 2TB of bandwidth a day from 30k visitors, and costs about $100 a month to run on a dedicated server) together with some friends and am currently learning iOS dev, and I don't believe its a stretch at all to think that me and a buddy could build something like Snapchat or Instagram in a couple of weeks and throw it up on App Engine.
I know almost nothing about finance and haven't ever managed or worked at a for really reals startup, so let me know if I'm way off here. I would just like to get some people's perspectives on this. Sorry for the rant.