I'm getting a bit bored by this perceived dichotomy of funded vs. bootstrapped startups. They are simply two different kinds of companies, and they can perfectly well coexist in an industry.
Some startups can be profitable almost from day one, and need very little cash to get there; others need to do experiments for a much longer time, and could end-up having a useful technology but no revenue model. In the latter case it's only natural that someone will come along who could make use of the technology and simply acquire the company instead of spending even more money developing their own solution.
In many cases the companies in the latter group never have any significant chances of making a lot of money, and acquisition is really the only way for the founders to monetize on their work. Similarly, the companies in the former group could simply never grow enough to be interesting for acquisition -- we call them lifestyle businesses.
37signals and Carsonified are great examples of lifestyle businesses; Digg, Twitter, Zemanta, and even Google, are companies which would never happen if they have tried to bootstrap.
Some startups can be profitable almost from day one, and need very little cash to get there; others need to do experiments for a much longer time, and could end-up having a useful technology but no revenue model. In the latter case it's only natural that someone will come along who could make use of the technology and simply acquire the company instead of spending even more money developing their own solution.
In many cases the companies in the latter group never have any significant chances of making a lot of money, and acquisition is really the only way for the founders to monetize on their work. Similarly, the companies in the former group could simply never grow enough to be interesting for acquisition -- we call them lifestyle businesses.
37signals and Carsonified are great examples of lifestyle businesses; Digg, Twitter, Zemanta, and even Google, are companies which would never happen if they have tried to bootstrap.