@msmamet pointed me to this article on the CrowdVine blog responding to the post-mortem on the demise of EventVue. Tony makes a number of good points that echo a lot of my own feelings on the self-inflicted do-or-die pattern of funding and failure seen in so many web software businesses. Two points, specifically, are worth repeating:

I think it’s fair to say that I’m anti-venture-capital. I think it’s a corrupting influence on products and companies. EventVue is just a mild example. They took a small amount of investment (reportedly $265k, although from their story it sounds like there was a double-down round). That’s peanuts, but it was enough to put them on that weird (to-me) funded company path.

Here’s how I would summarize the history of their company. They had a product that worked well and they had some paying customers. However, they doubted the product could be a big seller because it was a “nice-to-have” with a low price point in an industry with long sales cycles. So they switched directions to Discover, a product that seemed to have bigger upside potential because it was designed to be more tightly tied to the customer’s bottom line, but which did nothing to aid EventVue’s immediate bottom line. Then they tried another product. Then they ran out of money.

To me, that’s a history of a company moving backward. Every day gave them less traction and less money.

The post then goes on to describe CrowdVine's boostrapped path as the sensible alternative to the funded company roller coaster drop:

We took a different approach. We charged for our product from the beginning and we never once spent more money than we were making. So now we find ourselves in a much better situation: we’re still in business. It’s actually a lot rosier than just that: we have a growing base of repeat customers, we have no debt, and we have growing revenue.

The key advantage is that we never had a period where we weren’t a sustainable company. That means we have longevity. Bootstrappers, like us, live with a lot of constraints, but they also have the advantage of time.

Amen to that. Constraints are a bitch, but so is shutting down because you can't sustain the spending patterns initiated by a big infusion of cash with revenue growth fast enough to both appease investors and stay in the black. The fact that the VC model so diligently aims for a quick sale is that it's nearly impossible for a small web software startup to do this with revenue alone.

Finally, the EventVue's post mortem talks about what happened at the very end:

We relaunched EventVue to be “best way to discuss events in real time” last week, focusing only on the chatter functionality that was popular in our social network.  This was really a hail-mary pass because we were out of capital and doing consulting work to buy time to get the relaunch out the door.  Unfortunately, we have not seen enough traction to make us want to keep working on this.  It really is too little, too late.

Assuming this consulting had something to do with the EventVue product line, it seems like more manageable growth on existing revenues (even if they were from consulting) would have allowed that funding to be left on the table. Would they have shut down a product liked by their customers if they didn't have all that funding on their backs? I can't imagine they would have.