Union Square Ventures just funded Twitter. Fred Wilson noted that the company has no business plan, but they’ll figure that out as they go. Paul Kedrosky threw in his two cents, coming to the broad conclusion that business plans give investors too much to nitpick. These guys are professional investors, so you have to listen. You don’t have to follow - it’s just the opinions of two investors who happen to know each other pretty well - but you do have to listen.

A good portion of the investment and entrepreneurial communities will proceed to adopt the same tack now that it’s been publicized. Others will call this attitude a sign of froth in the market, and become more cautious about ongoing opportunities. Giving investors what they want (or don’t want) should be viewed as a by-product of which camp they are in.

Listen to a few stories around the fire before you decide which camp that is.

Yea, the political blogosphere is grassroot, people-powered, and other such malarkey. But there is too much blabber about corporate funding, and how it is so one-sided. Bottom line - fundraising birds seem to ride whatever wind blows their way.

I have often wondered what would happen when the two mentalities collided. On one hand you have the VCs, with rolodexes a mile deep, including direct lines to the best bankers. Any of the Sand Hill Road crowd will do. On the other, you have the scrappy entrepreneurial types, very creative and driven, and often with a little cashola of their own, garnered from previous deals. Guys like Mark Fletcher, founder of Bloglines, come to mind. Then you throw Google’s rejection of the status quo into the mix, with their dutch auction IPO, and you are left with an interesting dynamic.

Is the venture funded deal becoming a thing of the past? I wonder.

The Red Herring recently reported (via Thomson Venture Economics), that VC overhang presently stands at roughly 53.6 billion (see $53.6-billion overhang). For those new to this term, overhang is the amount of money venture capitalists have in commitments from limited partners, which is yet to be invested. That is a pretty big number. It means there is too much money chasing too few deals. But are there really too few deals?

Bloglines, a leading RSS aggregator recently purchased by AskJeeves (which was then subsequently purchased by Barry Diller’s InterActive) is a classic example of a great product built by a serial entrepreneur, without venture funding. Then, a few weeks later Topix, another bootstrapped company, gains a huge foothold in news delivery with the sale of a controlling interest to the CareerBuilder triumvirate of Gannett, Knight Ridder and Tribune Co.

Two interesting companies, with still gelling business models, get off the ground and running with no VC funding, and then find an exit. With many large tech companies looking far and wide for competitive advantages, and increasingly deal-saavy serial entrepreneurs starting up company after company, where does that leave VCs?

Venture capital pools will always have a place in the system, but they may not always steer it like they used to. The overhang will eventually shrink, either by raising less money going forward, or returning some commitment letters. Many VCs will also shift their investment philosophies, chasing more or less deals at particular stages, and/or migrate into leveraged buyouts, turnaround situations, and transactions outside their core industries.

Nonetheless, I believe there is going to be ample room for more Topix style startups down the road, and many of them will be built in the grand fashion of tech lore, in someone’s garage.