"It is also easier to get investment for an idea that is in a “hot” market such as e-commerce during the dot-com boom and social networks more recently. VCs also expect their companies to expand rapidly. This makes a VC-funded company burn cash by rapidly growing in a crowded and noisy field with expensive and scarce engineers."[1]

[1] http://codesynthesis.com/~boris/blog/2008/11/10/develop-new-...