[EGreg]

In many global markets, there is always pressure to grow fast. You can only afford to grow slowly due to the inefficiencies of the market. In the end, the Googles and Baidus of the world now rule search, the Amazons and Alibabas rule shopping, etc. They grew super fast in the beginning, churning programmers even, to get to where they are.

So VCs are like corporations or central banks or other superpowers of financing -- they grant an unfair advantage to whoever they back, to defeat the other guys. Either by offering lower prices (eg free service) until the competitor runs out of money, or R&D to get to the next level of efficiency, patent portfolio, engineering talent, brand etc.

So financing is often necessary to compete in global markets. If you don't take it, you are betting that the market is either not global or not efficient.