Latest quarterly numbers show venture capitalists still investing less in early-stage startups

Still, there are sharp divisions on whether that trend is good for the valley. Some note that angel dollars can tide over a company in a low-cost field like the Internet however don't go far in more expensive industries just as biotech.

"VCs are acting like business schools, which no longer take kids right out college nevertheless wait two to four years until they've proven themselves," said McNealy, who advises a number of startups. "They're at heart saying, 'We're not going to take a chance, we'll let the angels do that and vet them first.' "

The only one getting his licks in

McNealy's not the only one getting his licks in. Guy Kawasaki, the veteran tech investor and author of "Enchantment: The Art of Changing Hearts, Minds, and Actions," says entrepreneurs need venture capitalists less than ever. With the down economy, people and office space are cheap, he notes, during open-source software, cloud computing and the rise of social media like Twitter have lowered costs for infrastructure and marketing.

Still, he noted that when you combine the results from seed-phase companies with those for "early-stage" firms, which are startups with more employees and some revenue, the numbers look better; the two sectors represented 44 percent of all venture deals in the quarter.

The National Institutes of Health

Jensen's company relied first on grants from the National Institutes of Health, at that time angel funding, previously landing venture money in 2007. "The 'two guys in a garage' thing is a bit of a myth, especially in life sciences," he said. "VCs are as a rule waiting to see some path to commercialize the research."