Right now, a small team with no money can start a real online business. If the founders are very lucky, they generate revenue and begin to grow. If they are exceptionally fortunate, they get sold to Google for $1.65 billion. But most of the start-ups we cover on Webware.com will languish for a while in obscurity and eventually die. The problems they are solving are not big enough.
This is one of the reasons that venture capitalists are having a hard time. Many are are sitting on funds of hundreds of millions of dollars, looking for places to put large chunks of that money. But you can't put more than a few hundred thousand into a typical Web start-up without drowning it in funds it can't use. Over-funding a company can kill it, just as surely as starving it of resources.
This is a problem, because if a business can be funded by credit card debt, a competitor can come in and start the same business, and undercut whatever profit margin the first business is relying on to keep the Ramen cupboard stocked. Big businesses have defensive walls around them, and often these walls are built with stacks of money.
These are the businesses that I really like--big plays that take big money and major industry expertise to start. If they work, they change the landscape.
The reason there aren't that many big ideas these days is because it doesn't make sense to raise a lot of money when the probability is greater that a "successful" start-up will be purchased by a large company within a few years, rather than going public over a number of years.
Just take a look at the facts...if you look at the acquisitions made by Google and Yahoo! over the last few years, the acquisition price for the majority of the deals was under $100M or "undisclosed" (which means that it wasn't a large number since they only have to disclose details on deals that have a material impact on their financials).If chances are a start-up will be purchased before they are worth more than $100M, it makes sense not to raise a lot of money. The more money you raise, the higher the exit price becomes for all investors to be happy and it reduces the options a company has over time.
I'm not saying this is a good thing. As I have argued a few times (here and here and here), I believe there is a fundamental disconnect between the currently liquidity climate for start-ups and the funding environment. Until this disconnect goes away, I think we will continue to see a lack of start-ups with big ideas.