No money, no hype.

That's not a line from a Bob Marley song. It's a simple fact of life in the high-tech world.

And for most new companies trying to get a foothold in a market, the money trail leads to places like Sand Hill Road, the legendary Menlo Park, Calif., address of some of the industry's most powerful venture capitalists.

Perhaps more than anything, the record amount of venture funding available since 1996 has fueled the dizzying growth of the network industry and made the Internet a household word. The millions of dollars in venture funds given to thousands of start-up firms have allowed fledgling technologies to flourish and mega-markets to form.

Oh yes, these investments also have provided unprecedented wealth to venture capitalists.

There's nothing wrong with that. After all, if their money helps nurture and advance a great technology, venture capitalists deserve a nice cut of the action.

Unfortunately, many venture capitalists are more interested in the quick score than in developing technology. And that sometimes means hyping a limited or flawed technology or product as the Next Big Thing and then cashing out.

"Venture capitalists are the masters of the pyramid swindle," says Tom Nolle, president of CIMI, a technology assessment firm in Voorhees, N.J. "A venture capitalist puts in $50 million, and all he wants to do is see a bailout in the form of an initial public offering or a buyout within three years. They call it an exit strategy.

"If he can do that," Nolle says, "he'll make $150 million on his $50 million, and he doesn't care if the company ever builds a product. He's in it for the short term."

A harsh assessment, but Jim Breyer, managing partner at Accel Partners in Palo Alto, Calif., concurs that quick hits are common in the venture world.

"In the times that we live in, the one-year or 18-month flip can be attractive economically," he says. "So for venture capitalists who take a short-term view, there may very well be a strong incentive to fan the flames regarding hype." - Chris Nerney

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