Most startups outside the US grow without VC capital. But in the US, with all the money trees around, you would be crazy to pass up the opportunity for free money.
But it isn't free, free implies that they don't demand anything in return. You sell investors an ownership stake in your company, so it is the same as any other transaction. That means that they get a portion of whatever profit you make, and depending on how large of a stake they own, a say in decision making and executive matters. Forgive me if this is a bleak outlook on businesspeople, but the last thing I would want to do immediately after founding a company is sell a portion of it to some suit with a $400 haircut(smart technical investors like Paul Graham seem to be few and far between) who probably doesn't know or care about the product or technology outside of the possible return on their investment from the profit made from it, and let these people tell me how to run it, or even worse conspire against me and oust me from my own company(see: Steve Jobs).
I'm not denouncing VC as a whole, and I'm sure it is very beneficial when your company is becoming too much to run with your initial resources, and can be a big part of what accelerates big things to huge things. I'm just curious as to why the trend today seems to be to acquire as much early stage VC as possible, some companies even trying to get it before launching their product, through means like accelerators and such. $100k investment for 10% of my company? HELL NO. As I said before, if my web/software company is becoming too much for me to run with my initial group of founders, that probably means it is somewhat successful, and at that point I have more authority to dictate terms to investors. This means that I can get a larger investment from them and give them as small a piece of the company as they will accept for their investment, rather than being completely at their mercy because I haven't even launched my product and have 0 pull. Larry and Sergey as well as Zuckerberg were pretty smart about this. When their companies had users and pull they could afford to be picky about who they accepted funding from, and for good reason - they were control freaks(I mean this in the best way possible), and didn't want anything put out by their company to be not to their specifications. Obviously this worked well for them.
This is my very basic understanding of how this stuff works, so once again correct me if I'm wrong.
