There is certainly a lot of hype. Eight weeks ago I and a friend launched our service (http://billmonk.com/), and on the first day were contacted by a prominent VC. Since then, we've spoken to seven more.

Don't get me wrong. Our product is great, and our users love it - but the attention given to a two-man startup around for such a short period of time was disproportionate to what we had proved to the market at the time.

We decided to hold off on trading a large amount of equity for a relatively small amount of cash - especially when cash isn't needed to bootstrap a company like ours. In our situation, it makes better sense to seek angel funding before talking to VCs when we need money for growth.

Although venture capitalists ARE strangers with candy, they're not necessarily evil or stupid. In this current environment where a lot of small companies are flipped, speculation makes financial sense. Given the potential returns, an investment of a million or two is chump change for these firms. For small companies, that's all you need; what's actually more important is that VCs provide all-important media and business contacts. The bottom line is that you should be wary of the candy, but it can help you realize your ideas. If you are motivated, skilled, and have an idea, this is a great time to join the gold rush.