While I agree that VC funding is not necessarily required to spark a startup, I do however believe that it can serve wonders in terms of building connections and publicity. Prominent bloggers, such as Michael Arrington and Peter Cashmore, hunt for news relating to startup fundings. Moreover, a VC firm brings high level connections from people with real experience in this game (Vinod Khosla, Ram Shriram, etc).
Almost all sufficiently large startups eventually require Venture Capitalists. So there is no hard and fast rule on this; just take the money when it makes sense.
True. And to clarify my comment, it is also a _slow_ way of growing in many cases. I've just seen so many people willing to burn through other peoples' money without a thought that the idea often appeals to me.
The real principle here is the golden rule of spending money- no matter what the source is: put yourself in the investor's shoes (even if there isn't one). Pretend it's your $10,000 or $5mil and you're investing in a company that you have little control over- would you be pleased with how it is spent?
Almost all sufficiently large startups eventually require Venture Capitalists. So there is no hard and fast rule on this; just take the money when it makes sense.