This makes complete sense if you assume that a company that only needs a few hundred thousand to "figure things out" has an equal chance of becoming a billion dollar company as a company that is looking for a multi-million dollar investment that "is already taking off." That's evident to us inside, but your own description of the companies is enough to make a VC understandably skittish.

I understand your overall point, and I agree with it, but I don't think this assumption was clear the first time I read through the article.

I wholeheartedly agree that convincing VCs of this isn't the way to go, and that others are going to make a killing by stepping in. My main point is only that the VCs aren't being irrational.