Interesting article in Delaware Online yesterday (what, you don’t read Delaware online?) about venture capital and the Web 2.0. A couple of quotes:

“It is much cheaper to get a Web 2.0-based company off the ground and running,” says Jeffrey Babin, a lecturer in engineering entrepreneurship at the University of Pennsylvania. “The entrepreneur doesn’t need as much money so he can do a lot more bootstrapping. He can build more value before even going to a VC.”

Wharton management professor Gary Dushnitsky says there is an excess of liquidity — not only from VCs, but hedge funds and private equity firms — looking for a home. “The financing market has changed a great deal,” he says. “There used to be a few dozen venture capital players. Now there’s pressure from hundreds of private equity firms encroaching on VCs. The VCs feel more pressure among stages of investment. This money has to be invested or returned.”

Hmmm… excess liquidity, hedge funds, and private equity… where have we seen that get out of hand before?