WebProNews

The next startup that gets venture capital (VC) funding may very well be dealing with firms established by Yahoo and Google in addition to the Sequoias and Kleiner, Perkins of the world.

That money a new technology company gets as it starts from the ground floor could come courtesy of two of the biggest Internet players today, John Battelle posted from London today.

While participating on a panel focusing on Web 2.0 and venture capital, Yahoo's managing director for corporate development in Europe, Simon Levene, dropped a little bombshell, which Battelle duly noted in his blog:

Addressing the audience of mostly VCs, [Levene] said:

"Folks like Yahoo will be competing with you for deals."

Levene mentioned to me later that Google has even set up a fund to compete with VCs for early stage company financing (I had not head this before), and that Yahoo feels it can and must compete to buy early stage companies before VCs can get in with larger financing. An interesting development. He added that entrepreneurs are weighing the risks of having to execute against the exit requirements of a second or third round of financing, vs. the bird in the hand of a deal with a big player like Yahoo, and often, as with Flickr, they are going with the platform.

David Utter is a staff writer for WebProNews covering technology and business. Email him here.