MoneySmart

These days you don't usually see funding going to 10 guys with nothing to show but a PowerPoint display. Startups nail their first round of institutional funding only after proving that they can deliver customers and revenue. That's prudent behavior on the part of venture capitalists. But a true early-stage venture -- one with no paying customers, just a technology or a service that will one day bring in boatloads of cash -- is rarely the recipient of their largesse.

It's partly a response to the excesses of the bubble and, more recently, an attempt to salvage some kind of return for their limited partners. That's why you've seen so much money flooding into late-stage deals during the past year; think Mforma, Vocera, and Vonage. But it's a new era. VCs have new money, a new seven-year clock on their funds, and an imperative from limited partners to deliver extraordinary returns. Early-stage investments are the way for them to do it, and you're starting to see the results.

Take Enuclia, which recently closed a Series A round for $5.3 million led by Sevin Rosen Funds and BA Venture Partners. The company, based in Beaverton, Ore., is designing programmable chips for digital televisions. Enuclia is tight-lipped about exactly what it's doing, but the former Pixelworks pros at the startup have designed a chip that allows television manufacturers like Philips, Sharp, and Sony (SNE) to both lower their cost of production and improve picture quality. Higher-end manufacturers are in desperate need of something to differentiate their TVs and justify higher prices. No-name Taiwanese and Chinese manufacturers have gotten too good at cranking out cheap televisions that rival the picture quality of the name brands. As a result, companies like Sony have been forced to lower their prices or face ever-shrinking sales. Enuclia's chips potentially get them a way off that money-losing slippery slope.