Last month I blogged on VC innovator Simeon Simeonov's concept of a "third way" for bootstrappers and venture capital firms to interact at the earliest stages of launching a new startup.

Here are my comments with a response from Sim.

But whether by design or inertia, a merger of bootstrap and VC funding techniques may be inevitable for a certain segment of high tech low cost venture startup if this article at Portfolio.com is any indication.

Guy Kawasaki has suggested that the next big thing could be started for under $500,000, so a serial entrepreneur like Jared Kim may well turn out to be the founder of a future low budget Google or Facebook or at least be the latest flavor of the month on the way there.

See a video below of the kind of PC based game clip found in this case on YouTube which could form the basis for Kim's new company WeGame, a product he hopes to bootstrap into the big leagues (offering clips for console systems like Xbox, PlayStation and Wii).

However, in this humble bootstrapper's opinion, the combined approaches, (bootstrapping and venture capital funding) could create the worst of both worlds if not handled correctly.

Here are some concerns:

• Upfront outside idea funding no matter how small may not encourage the most efficient use of resources (Kim admits the $500,000 he got in outside funding is more than he thinks he'll need.)
• Lower funded companies may still be encouraged to focus on users first with less clear idea on how to develop cash flow.
• This may be OK in a model where a business with cash flow is being used to fund the development of a new venture (the Apple II to Macintosh model) but funding rounds are finite making the chances of sudden death higher.
• VC choices still seem fickle like getting your band signed for a record deal. Traditional bootstrapping may still be the best approach especially if your product or service doesn't fit the trends of the moment

Microsoft Small Business gives this great range of options for starting your next venture.

On the positive side of a combined bootstrapping and venture capital funded approach:
• Entrepreneurs may be able to use smaller venture rounds to bootstrap their product or service for sale to a larger company (one of Kim's backers naval Ravikant started a company eventually bought by Ebay)
• Larger companies willing to make these purchases can then use their existing cash flow to bring a user rich product or service to profitability
• A sort of Venture Capital micro-financing economy could be created around the idea of funding a bootstrap of products or services for sale to be grown to profitable business models by larger companies once they are up and running.

Additional thoughts? Share them below.