Venture Capital gave rise to many famous internet virtues such as DIVX, VoiP, RedHat, not to mention sites like Yahoo, YouTube. Usually those Venture Capitals have a minimum investement criteria around $250,000 and feel most comfortable investing around $500,000 to 1,000,000 or few millions. If I quit my day job to dedicate myself to software development for about 6 months, hire another programmer, spend $10,000 for commercials and such I'd still not spend more than $100,000. Does anyone have the idea where did previosly mentioned software and internet services developers such as DIVX or YouTube spend hundreds of thousands of $ in early stage of their development and where could/should a software company/internet services web-site spend all that money?
Programmers, marketing, building, equipment, computers, servers , salaries, etc. etc. etc. It takes a lot more then you ever think starting out. There are so many incidental costs. Oh ... and taxes!
I believe it comes from the premises that big dollar value project would yield big profits from the VC. The VC in the end is not so interested in the technology as much as how much they potentially earn from their investment in the shortest period of time. They would be hoping for a buyout or a stock listing where they can cash out their investment.