Cheaper to run a start-up?

VentureOne reported that VC "poured more money into U.S. companies in 2005 than in any year since 2001". But perhaps the most interesting analysis was that money was moving from health care and IT (which experienced a dip in funding) towards consumer and business-services sector, which according to VentureOne "encompasses Internet commerce companies" and "produced gains in 2005 not seen since the dot-com boom days."

"Fueling this shift in investing is the lower start-up costs involving Internet start-ups, which are benefiting from open-source software, and cheap online memory and storage technology. "

I have been amazed in the last couple of years how much cheaper it is becoming to get great tools for your business, either on an open source or pay-per-use basis.  Some great examples are Basecamp for project management or Arena Solutions for PLM.  If your business is software, then you can get lots of infrastructure and tools that can enable you to unleash your creativity.

Bottom Line: Look for low cost tools, effectively outsourcing non-core parts of your business.  However, such advancements also lower the barriers for entry, so we can expect the competition to intensify.